Shaw reports record earnings

A strong fourth quarter propelled the Shaw Group to a record fiscal year, with the Baton Rouge-based company reporting $140.7 million in earnings during fiscal 2008. That breaks down to $1.67 per diluted share for the year, which ended Aug. 31. In the final quarter, Shaw earned $82.6 million, or 98 cents per diluted share. Those results compare with the $19 million loss Shaw reported in fiscal 2007. Annual revenues increased 22% to $7 billion. The company now has a $15.6 billion backlog of construction contracts, compared with a $14.3 billion backlog at the end of fiscal 2007.

Shaw feeling the pinch of slowdown

In a slowing world economy, Baton Rouge-based Shaw Group, a global engineering and construction company, is apparently feeling the impact. While the company’s record fiscal year and 30% average revenue growth in the past two years was driven by numerous $100 million projects, stock analyst Patricia Oey with Morningstar reports “a significant fall in new contract awards” is anticipated because of ongoing global financial turmoil. Morningstar plans to lower Shaw's near-term forecast, but she is optimistic about the company's opportunities in nuclear power. “Average returns on capital have been about equal to Shaw’s cost of capital, but have experienced a high degree of volatility because of frequent cost overruns,” Oey says.

A local analyst says Shaw’s yearly rate of return to investors over the last 10 years through Sept. 20 of 8% (at $30 a share) has fallen to 3.62% (at $16 a share). The company's stock, which peaked at more than $75 a share in early November, has dropped sharply. Over the past two months, shares dropped from $51.28 in late August, to $13.24 on Monday, mirroring the dramatic plunge experienced by the Dow.

Because of the nature of its work, Shaw is an economically sensitive company, analysts say. Shaw is a profitable company, but its debt burden has been growing and, even though it is very successful at getting contracts and has substantial technical expertise, the company has not successfully translated that in the long run into strong, consistent earnings.—Anna Thibodeaux

ExxonMobil posts biggest U.S. quarterly profit ever

Exxon Mobil Corp., the world's largest publicly traded oil company, reported income today that shattered its own record for the biggest profit from operations by a U.S. corporation, earning $14.83 billion in the third quarter. Yet numbers contained within the company's most recent financial report revealed production numbers that continue to sag, and shares slipped 3% in midday trading. The Irving, Texas-based company has reported unprecedented back-to-back quarters, the end of the most recent coinciding with a rapid plunge in crude prices. Benchmark oil prices fell another $2.91 to $64.59 today on the New York Mercantile Exchange, about 56% off record highs in July. Exxon said net income jumped nearly 58% to $2.86 a share in the July-September period. That compares with $9.41 billion, or $1.70 a share, a year ago. The previous record for U.S. corporate profit was set in the last quarter, when Exxon Mobil earned $11.68 billion. Revenue rose 35% to $137.7 billion.

Beaumont Lane land sale pulled after no bids

Plans to sell three undeveloped lots in the Beaumont Lane subdivision have been put on hold after no one bid for the property. John Noland says he received several inquiries about the land, but no one made a bid for the land before the deadline of noon Wednesday. There was a minimum bid of $1.5 million for the 2.2 acres behind the Catholic Life Center on Acadian Thruway and Hundred Oaks Boulevard. "This is a consequence of all the turmoil going on in the financial markets," Noland says. "I'm going to wait until times get better in the financial world and consider selling another day."—Timothy Boone

VitalSource Specialty Hospital sells to Promise

Promise Hospital of Baton Rouge, a long-term, acute-care facility, has entered into a letter of agreement to purchase the 26-bed VitalSource Specialty Hospital. Details of the transaction, which is expected to be finalized in the next few months, were not disclosed. VitalSource is building a new facility on Mancuso Lane near Essen Lane, which Promise will occupy once construction is completed in the next two months. Promise operates three LTAC hospitals in the Capital Region with 111 total beds: one at Ochsner Medical Center, one at Baton Rouge General Mid City, and Promise Hospital of Ascension in Gonzales. The new location will serve patients in the Essen Lane-Bluebonnet Boulevard medical corridor.

Baton Rouge ranked in top third of cities for singles

A survey of the best cities for relocating single adults ranked Baton Rouge 30th out of 100 U.S. metro areas. The survey, by Primacy Relocation and Worldwide ERC, looked at factors that make it easier for adults to settle into a city, such as the local population of singles between 25 and 34, male-female ratios, cost of living, prevalence of restaurants, bars, sporting events and concerts. Boston ranked first and Nassau/Suffolk, N.Y., second. New Orleans ranked No. 19, and Grand Rapids, Mich., ranked No. 100.

LSU continuing education offers 'Fundamentals'

A three-day management foundation seminar will be offered by LSU Continuing Education Nov. 10-12 and Dec. 8-10. "Fundamentals of Supervision" covers the essential skills supervisors and managers need to maximize their job performance. The courses will be taught by professors from LSU's Rucks Department of Management and consultants. Customized courses, designed to meet organizational needs, are also available. For more information, go to outreach.lsu.edu.

Deadline looming for Book of Lists

Business Report is updating information for its annual Book of Lists. If your company was on a list in 2008 and you have received a request for updated information, please reply by the close of business Friday to be included in the book. If you think your company belongs on a list, please send an e-mail to jgennaro@businessreport.com.

Financial roundup: Economy shrinks, signaling recession … Jobless claims hold steady at elevated level

Consumers cut back by biggest amount in 28 years: The economy jolted into reverse during the third quarter as consumers cut back on their spending by the biggest amount in 28 years, the strongest signal yet the country has hurtled into recession. The broadest barometer of the nation's economic health, gross domestic product, shrank at a 0.3% annual rate in the July-September quarter, the Commerce Department reported Thursday. It marked the worst showing since the economy contracted at a 1.4% pace in the third quarter of 2001, when the nation was suffering through its last recession. "No question. We're definitely in a recession. That is just a reality," said Brian Bethune, economist at IHS Global Insight.

Ike-related claims drop in Texas: The U.S. Department of Labor reported today that initial filings for state jobless benefits rested at a seasonally adjusted 479,000 for the week ended Oct. 25. Economists surveyed by Briefing.com expected the number to fall to 473,000 from the initially reported 478,000. Last year, there were 332,000 Americans filing new unemployment claims. The Labor Department reported there were 7,400 unemployment claims related to the effects of Hurricane Ike in Texas, down from the 12,000 such claims last week.

News roundup: Jet fuel prices down, but surcharges still high … Mortgage rates reach three-month high … Bloomberg looks at bond issues

What a shock: Despite lower jet fuel prices, fuel surcharges on international flights are higher than a year ago, according to a USA Today report. Fuel surcharges on tickets have doubled, and shorter flights have higher fees than longer distance flights. Airlines defend the practice, saying the surcharges didn't cover their costs when fuel prices were much higher. Read the full story here.

Volatile rates: Mortgage rates surged to a three-month high over the past week, according to Bankrate.com. A survey of 30-year fixed mortgages found the average rate was 6.77%, compared with 6.32% last week. The rates were driven up by the expansion of mortgage credit spreads. The Web site says the difference in yields on mortgage-backed securities vs. those of risk-free Treasury yields hit its highest level since 1986.

On the ballot: East Baton Rouge parish voters won't be the only ones deciding on a big government bond issue Nov. 4. State and local governments across the U.S. have $66 billion in planned borrowing initiatives on the ballot next week, issues that would provide money for schools, infrastructure and other projects. The biggest is a $16.8 billion initiative in California that would fund a high-speed rail network, offer rebates to residents who buy alternative-fuel vehicles, subsidize research in renewable energy, finance loans to veterans and expand children's hospitals. While borrowing plans usually do well at the ballot, analysts warn with the weak economy and financial difficulties experienced by many states, voters may be leery of supporting big new spending projects. Read the story here.