UPDATE 2-Fluor takes $163 mln hit on wind farm; shares down

* Delays at wind project to cut Q3 EPS by 90 cents

* 2010 EPS forecast cut by 70 cents

* CEO warned of welding dispute last month

* Analyst sees further risk

* Shares down 5.3 pct; trading volume spikes
(Adds analyst comment, bylines; updates stock price; previous
dateline NEW YORK)

By Ernest Scheyder and Braden Reddall

NEW YORK/SAN FRANCISCO, Oct 18 (BestGrowthStock) – Fluor Corp
(FLR.N: ), the largest publicly traded U.S. engineering company,
said on Monday it will take a $163 million third-quarter charge
due to a delay on a wind project, sending its shares down more
than 5 percent.

Chief Executive Alan Boeckmann had warned last month of a
dispute with the wind farm’s owner, Scottish & Southern Energy
Plc (SSE.L: ), over welding quality, though he believed Fluor
would “come out on the right side of that award.”

On Monday, Fluor said the development, off the east coast
of Britain, experienced “a variety of execution challenges,
including material and equipment delivery” during the quarter.

Fluor expects the delay to cut quarterly earnings by 90
cents per share. Additionally, the company cut its 2010
earnings forecast by 70 cents to a range of $2.20 to $2.50 per

That news sent Fluor shares down 5.3 percent to $49.10 at
mid-afternoon. About 5.7 million shares traded hands on the New
York Stock Exchange, or nearly three times the daily average
volume of 1.93 million.

“I’m actually surprised the stock isn’t down more,” said
Gleacher & Co analyst Will Gabrielski. “There still is further
risk in this project.”

Fluor received the $1.8 billion contract to build the 500
megawatt Greater Gabbard offshore wind project in 2008. So far,
53 of an expected 140 wind turbines are in place.

The Irving, Texas-based company said much of the expected
third-quarter charge was due to higher costs to send more
subcontractors to the region, and to adverse weather.

The endeavor, Gabrielski said, is seen by many as a
“first-of-its-kind” with “a lot of complexities.”

“Any time you’re working offshore, weather plays a big
factor,” he said.

At a San Francisco investor conference last month,
Boeckmann said Fluor and Scottish & Southern could not agree on
welding standards, which delayed the project and added costs as
it caught up with the schedule and reworked the steel.

But he also said Fluor had not booked any profit on the
project since the dispute began. “We’ve only booked revenue at
cost, so I think there is — if that comes out like I think we
have — we’ll have some upside on that project,” he added.
(Reporting by Ernest Scheyder and Braden Reddall; Editing by
Maureen Bavdek and Richard Chang)

UPDATE 2-Fluor takes $163 mln hit on wind farm; shares down