FMC Technologies Looking Good
FMC Technologies is particularly well positioned in the subsea systems market, where it competes with Cameron International Corp. ( CAM ) . Subsea activity represents the company’s largest and fastest-growing business, accounting for about 70% of revenue. Subsea products have seen an increase in interest, and we expect earnings in this segment to strengthen – especially due to FMC Technologies’ leadership position in subsea production systems, including subsea trees, controls and manifold and tie-in systems.
Following the Gulf of Mexico oil spill, we expect the company to benefit from the near-term requirements for better offshore safety equipments. Stricter regulations on drilling could translate into enhanced opportunities for subsea equipment suppliers like FMC Technologies.
With a major portion of its total revenue coming from outside the U.S., FMC Technologies’ international operations are expected to be a key growth driver going forward and will play an offsetting role to the relatively soft domestic drilling scene. We have identified Latin America, Asia Pacific and the Middle East as the key markets in this regard.
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These may sound like big numbers, but that is for an industry which expects revenues of $594 billion this year. That means that the 2.9% margin of 2010 will shrink to 1.4% this year. The biggest shift in our forecast is the price of oil.
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