The Global Power Group of Foster Wheeler AG (FWLT) established two new service centers in Germany and Finland, thus expanding its power boiler service business in these countries. The power plants, in proximity to the service centers, will have access to auxiliary parts, boiler pressure vessel gears and boiler modernization equipments.
The service centers of Foster Wheeler provide services to all type of power boilers, i.e. of any brand or model. The new centers will be providing 24-hour emergency services to the plant operators.
In Germany, the company constructed its service center in Krefeld-Linn, consisting of 2,300 square meters of office and workshop space. Presently, the new center provides emergency services only and full fledged operation is expected to start by the end of 2010. Equipped with tube bending and welding machinery, cranes and storage facilities and other tools for site work, the Krefeld-Linn service center not only provides emergency repair service in Germany, but to the neighboring countries as well.
The service center in Finland is located at Kurikka in Western Finland. Foster Wheeler will open its 2,000 square meters Kurikka service center on November 1, 2010, and will be responsible for providing a faster and flexible service to local customers.
Foster Wheeler continues to be successful in booking contracts of varying types and sizes in key end markets, including a large award for the engineering, procurement and construction of a new refinery in India. The company's success in this regard is a reflection of its technical expertise, its long-term relationships with clients and its selective approach in pursuit of new prospects, where it has significant differentiators.
Longer term, Foster Wheeler believes that world demand for electrical energy will continue to grow and solid-fuel-fired steam generators will fill a significant portion of this incremental generating capacity. The clients are anticipated to invest in new and upgraded capacity to meet rising demand for energy.
However, as the company's operations are concentrated in four industries (oil & gas, oil refining, chemical/petrochemical and power), it may be adversely impacted by economic or other developments within these industries. The company is also 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 adversely impact 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 future.
The competitive pressure in its E&C Group was somewhat more pronounced than it was in the previous year. In its Global Power Group, demand for solid fuel boilers has also been very weak. Major competitors of Foster Wheeler are Fluor Corporation (FLR) and Jacobs Engineering Group Inc. (JEC).
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. We continue to maintain a Neutral rating on Foster Wheeler, with a Zacks #4 Rank (Sell recommendation) over the next one-to-three months.
FLUOR CORP-NEW (FLR): Free Stock Analysis Report
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
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