FWLT (MM)

U.S.-based Jacobs Engineering Group Inc. (JEC) announced that Jacobs Engineering SA (JESA), its joint venture with the Moroccan phosphate group OCP S.A (OCP), has been awarded engineering, procurement and construction management (EPCM) services contract for two fertilizer plants to be constructed in Jorf Lasfar, Morocco. The value of the contract has not been disclosed yet.

The deal involves construction of two integrated DAP/MAP (Diammonium and Monoammonium Phosphate) units of one million tonnes each. The plants are estimated to be commissioned in the second half of 2014 and the first half of 2015, respectively. Jacobs announced that had been awarded the first production plant in December 2010, and the second one in March 2011. The new contracts will boost the total to four.

Under the agreement, JESA will be providing management, procurement and administration of the design and construction of four new identical DAP and MAP production plants. This deal is a major OCP investment program toward production capacity expansion of DAP and MAP. OCP plans to raise its mining capacity by 70% through the addition of the four new plants that will gradually come on stream from July 2013 on the backdrop of surging global demand.

Jacobs and OCP entered into the joint venture in 2010 with equal ownership. The joint venture currently provides combination of engineering, project management and construction management resources, as well as services to industrial projects both in Morocco and internationally. OCP plans to raise its mining capacity by 70% through the addition of four new fertilizer plants that will gradually come on stream from July 2013.

Jacobs Engineering Group Inc. is one of the world's largest engineering and construction companies providing services to a variety of industrial, commercial and government clients across a global network. The company directly competes with its peers, such as Fluor Corporation (FLR) and Foster Wheeler AG (FWLT).

We currently have a Neutral recommendation on the stock. Jacobs has a Zacks #4 Rank, implying a short-term (1-3 months) Sell rating.

 
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