Can Fluor Find Growth Overseas?

In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue growth came from abroad. Today, that area makes up half of the S&P 500's growth.

And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.

With that in mind, today we're looking at Fluor (NYSE: FLR  ) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.

Where Fluor's sales were four years ago
Four years ago, Fluor produced 44% of its sales within the United States.

Source: S&P Capital IQ.

Where Fluor's sales are today
Today, America is still Fluor's largest market, but its influence is shrinking. While the United States still contributes 30% of sales, domestic sales growth lags far behind other regions.

Source: S&P Capital IQ.

Construction, engineering, and project management can be a lumpy business, and that's reflected in the wild variations in the amount of sales Fluor is booking in different geographic regions. Across the past four years, growth rates in Asia, Canada, and the Middle East are exploding, while the United States and Europe have seen their sales slip.

Segment

4-Year Sales Growth

United States

-5%

Canada

198%

Asia Pacific (includes Australia)

330%

Europe

-51%

Central and South America

65%

Middle East and Africa

96%

Source: S&P Capital IQ.

Large projects can have outsized impacts on total company sales, particularly if the segment had lower sales four years ago like Canada did. Also, since Fluor will win large projects in industries like oil & gas, having a major project either ramp up or near completion can shift the company's geographic focus. For example, sales to Canada are being driven in large part by the booming oil sands in Alberta.

Competitor checkup
One last point to check is how Fluor's footprint compares with some of its peers:

Company

Geography With Most Sales

Percent of Sales

Fluor United States 30%
McDermott (NYSE: MDR  ) Australia 41%
Shaw Group (NYSE: SHAW  ) United States 85%
Jacobs Engineering (NYSE: JEC  ) United States 62%

Source: S&P Capital IQ. Results for most recently reported fiscal year.

Engineering and construction companies that have heavy ties with the energy sector are among the most global companies in the world. McDermott, which has been enjoying years of growth in Australia, recently reported that times are about to get even better when it was awarded a new $2 billion contract for the Ichthys project in the Timor Sea off Western Australia.

However, while Fluor and McDermott's energy bent leaves them globally diversified, Jacobs and Shaw's reliance on the United States has led to middling recent performance and a murky forward outlook. In 2009, hopes soared that the U.S. government would use stimulus money to fix the country's aging infrastructure. However, after the stimulus included less infrastructure spending than initially hoped for, and local governments were forced to cut funding after the financial crisis, the domestic construction and engineering industry was forced to deal with a new reality where growth is well below the heady days of 2007.

Keep searching for global opportunities
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Eric Bleeker owns shares of no companies listed above. You can follow him on Twitter to see all of his technology and market commentary. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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