Jacobs Engineering Group (JEC), the second-largest publicly traded U.S. engineering company, reported a 13% decline in earnings as the global recession weighed on demand. Jacob’s also lowered the top end of 2009 earnings guidance, which was already reduced just three months ago.
Revenue declined 7.3% to $2.7 billion and operating margins declined 40 basis points from a year ago. Weaker margins reflect the current weaker pricing environment for engineering and construction services, especially relative to the very robust spending environment one year ago.
Jacob’s backlog finished the quarter at $15.8 billion, a 5% decline. The bulk of the $665 million removed from the company’s backlog was due to an upstream project cancellation. With 75% of sales in North America, Jacob’s results will continue to be pressured by weaker engineering and construction spending, particularly in the oil and gas industries.
JEC shares finished the day -7.21%
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Peter J. Lazaroff, Investment Analyst
Tuesday, July 28, 2009
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