Tickers in this Article: SHAW, KBR, JEC, FWLT, MDR
Engineering and construction firm The Shaw Group, Inc. (NYSE:SHAW) reported lower fiscal second quarter earnings, due in part to negative currency exchanges. Shaw, which is involved in nuclear power construction, has been the subject of investor focus since the Japanese crisis has thrust nuclear energy into the spotlight.

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Mixed Results For Shaw
Shaw prefers to report its results excluding its Westinghouse segment so as to give a truer picture of operations. Without the Westinghouse segment, Shaw earned $35 million or $0.40 per diluted share, compared to $40.1 million or $0.47 per share in the same quarter last year. A $9.5 million after tax cost increase on an energy and chemical project had an impact on results. Revenue was $1.4 billion in this year's quarter compared to $1.6 billion in last year's.

The Westinghouse segment included the impact of non-cash dollar-yen exchanges which resulted in a loss of $46.9 million pre-tax, or $28.7 million after tax. (To learn more, see The U.S. Dollar And The Yen: An Interesting Partnership.)

The Nuclear Question
A more dramatic illustration of market reaction to events could hardly be clearer than when Shaw's stock price plunged from over $40 to the low $30s after the Japanese nuclear crisis. When the earthquake, tsunami and subsequent aftershocks brought world attention to the Fukushima Daiichi nuclear reactor, this also propelled a nearly instant global re-examination on the role of nuclear power. The confidence in the safety of nuclear power had been gradually rebuilt in the United States after Three Mile Island's partial meltdown was threatened.

Prior to Fukushima, according to a Gallup poll, 62% in the US were in favor of nuclear energy. After Fukushima? The number fell to 44%. The U.S. Nuclear Regulatory Commission has 20 applications pending for approval to build nuclear plants, with four close to approval. Although Fukushima has renewed voices of opposition to nuclear power, nuclear advocates insist the industry is far better prepared and equipped to deal with problems. The sobering events in Japan will continue to fuel global debate on the future role of nuclear power.

Shaw's Take On The Nuclear Crisis
Shaw's CEO J.M. Bernhard Jr., pointed out that work on nuclear power units currently under construction continues. He also indicated that the company, given its experience in nuclear construction services, may have the opportunity to assist in the Japanese recovery effort. Other names in the engineering and construction space have also been mentioned as possible beneficiaries, including KBR (NYSE:KBR), Jacobs Engineering (NYSE:JEC) and Foster Wheeler (Nasdaq:FWLT). The extent to which this takes place will be clearer as the Japanese crisis continues to unfold.

Shaw's Business
There's more than nuclear of course to Shaw's business, as the company's disappointing performance from its chemical segment shows. Another firm, McDermott International (NYSE:MDR), also turned in disappointing overall results in its recent quarter. McDermott, which is heavily involved in offshore oil and gas construction, indicates via its results that maybe the global recovery isn't yet as robust as has been expected. Shaw and other engineering and construction firms have been poised to do better, but it's not happening yet, nuclear work notwithstanding.

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