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Foster Wheeler Wins EPCm Contract

Zacks Equity Research

A subsidiary of Foster Wheeler AG’s (FWLT) Global Engineering and Construction Group received an engineering, procurement and construction management (EPCm) contract from LANXESS Butyl Pte. Ltd. The contract is for a new neodymium polybutadiene (Nd-PBR) rubber plant to be built on Jurong Island, Singapore. The contract is included in the third-quarter bookings of the company, but the contract value is undisclosed.

Earlier in 2012, Foster Wheeler had completed the front-end engineering design for this project. Foster Wheeler’s scope of work is expected to be completed in 2014.

According to LANXESS, the new facility will be the largest of its kind and will have the capacity to produce 140,000 tons per annum of Nd-PBR. The facility includes processing and finishing buildings, a central control room, a substation and a tank farm. The new plant will be built beside LANXESS 100,000 tons-per-year synthetic butyl rubber plant. The 100,000 tons-per-year facility is the largest of its kind in Asia and is expected to start production in 2013. Foster Wheeler will be the EPCm contractor for this facility as well.

Manufacture of tire requires Nd-PBR, which reduces rolling resistance and increases vehicle energy efficiency compared with conventional tire rubber. It also protects the tire from scratches.Thus equipped; these tires make the car rides safer, more economical as well as environment friendly. 

Foster Wheeler hopes to build a good business relation with LANXESS by providing best services to their customers.

Foster Wheeler AG is based in Zug Switzerland, but its operational headquarters are in Clinton NJ USA.  The company operates through two business groups: the Global Engineering and Construction Group -- or Global E&C Group -- and the Global Power Group. Major competitors of the company are Fluor Corporation (FLR) and Jacobs Engineering Group Inc. (JEC).

We continue to maintain a Neutral rating on Foster Wheeler for the long term. The company has a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.

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