Foster Wheeler AG’s (FWLT) Global Engineering and Construction Group received a contract to provide engineering, procurement and construction management (EPCm) services for Sasol Chemical Industries Ltd.’s Sasolburg Utilities Expansion Project at Sasolburg, South Africa.
Though the contract has been added to Foster Wheeler’s second-quarter 2011 bookings, the contract value was not disclosed. The expected completion period of the project is second-quarter 2012.
Sasol has a list of expansion projects underway and the current project, which aims at expanding the capacity of the utility systems at the Sasol complex at Sasolburg, is part of it. Foster Wheeler was involved in the front-end engineering design (FEED) phase for this project, upon successful completion of which it was awarded the EPCm contract.
Longer term, Foster Wheeler believes that world demand for electrical energy will continue to grow and that solid-fuel-fired steam generators will continue to fill a significant portion of this incremental generating capacity. The fuel-flexibility of CFB steam generators enable them to burn a variety of fuels other than coal and produce carbon-neutral electricity when fired by biomass. In addition, the company’s steam generators can be designed to incorporate supercritical technology, which significantly improves efficiency and reduces emissions.
However, the company is subject to various environmental laws and regulations in the countries in which it operates. If it fails to comply with these laws and regulations, it may incur significant costs and penalties that could materially adversely affect its business, financial condition, results of operations and cash flows. Its business may be adversely impacted by regional, national and/or global requirements to significantly limit or reduce greenhouse gas emissions in the future.
Foster Wheeler AG is based in Zug Switzerland, but its operational headquarters are in Clinton NJ USA. The majority of Foster’s revenues and new businesses originate from outside the United States. The company serves the following industries: Oil and Gas; Oil Refining; Chemical & Petrochemical; Pharmaceutical; Environmental; Power Generation; and Power Plant Operation and Maintenance. Major competitors of Foster Wheeler are Fluor Corporation (FLR) and Jacobs Engineering Group Inc. (JEC).
We continue to maintain a Neutral rating on Foster Wheeler, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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