UPDATE 1-Stantec profit drops, sees market stabilizing

Thu May 13, 2010 9:40am EDT

* EPS C$0.30 vs C$0.45

* Revenue declines to C$296.7 mln from C$343.2 mln

* Stock falls 2.3 pct at open to C$25.85 (Adds detail)

OTTAWA, May 13 (Reuters) - Canadian engineering firm Stantec Inc (STN.TO) (STN.N) reported a 34 percent decline in quarterly earnings on Thursday that reflect a "tough economy", but it said the North American market is stabilizing.

Net profit fell nearly 34 percent to C$13.7 million ($13.4 million), or 30 Canadian cents a share, in the three months ended March 31, from C$20.7 million, or 45 Canadian cents a share, in the same period the year before.

Net revenue, which excludes sub-consultant costs, fell to C$296.8 million from C$343.3 million.

"We made an enormous effort last year to continue to manage our business effectively through a tough economy," Chief Executive Bob Gomes said.

"And that put us in a good position for the first quarter to capitalize on the opportunities presented, which meant winning a number of projects in key sectors and being able to put people back to work full time and hire additional staff in some areas."

Stantec's growth rate has been dampened over the past two years by slumping U.S. demand, but that construction market is expected to stage a modest recovery this year, said Dundee Capital Markets analyst Richard Stoneman in a recent note.

Shares of the acquisition-hungry company fell 61 Canadian cents, or 2.3 percent, to C$25.85 on the Toronto Stock Exchange in opening trade on Thursday ($1=$1.02 Canadian) (Reporting by Susan Taylor; Editing by Frank McGurty)

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