UPDATE 3-SNC eyes shedding assets, focus on Americas in new strategy
By Solarina Ho
TORONTO May 2 (Reuters) - Scandal-mired SNC Lavalin Group Inc reported a disappointing profit on Thursday as it laid out a growth strategy calling for it to liquidate some infrastructure investments and focus on the lower-risk markets of North and South America.
SNC, one of the world's largest construction and engineering companies, said that under the new strategy, the Montreal-based firm would leverage its expertise in resources, exit investments at maturity, potentially sell non-core assets and reduce its equity stakes in large investments in the medium term.
"While we will maintain a commitment toward a truly global company and global growth, Canada and Latin America will be our initial emphasis to take advantage of our strong position combined with the relative positive opportunity set in these locations," said Chief Executive Robert Card said during a conference call with analysts.
"We're not ruling out any geography, including Africa, North, South, East, West Africa," he added.
Some of the company's investments include overseas airports, rail, power, healthcare centers and highways.
"We believe the market will deem the strategic review and especially the eventual exit from mature concessions as a positive," Maxim Sytchev, an analyst with Dundee Securities, said in a research note.
"The same goes to de-risking the company's profile by re-focusing on North and South America."
SNC, which did not give a specific time frame for the strategy, is trying to move forward from a series of corruption and ethics misconduct cases involving former top executives after it uncovered tens of millions of dollars in mysterious payments more than a year ago. The far-reaching scandal stretched from Canada to Libya to Bangladesh.
Most recently, it reached a confidential settlement with the World Bank that excludes it from bidding on bank-sponsored projects for up to 10 years.
Card, who took over in October, said on Thursday that shareholders should not worry about a repeat of such events.
"Lessons have been learned," he told investors at his first annual meeting as top executive.
The company's shares fell 4.4 percent to C$41.56 in late trading on the Toronto Stock Exchange as results fell short of expectations.
Net income was C$53.6 million ($53.17 million), or 35 Canadian cents per share, down from C$66.3 million, or 44 Canadian cents per share, a year earlier.
Two projects in mining and infrastructure and environment, including one in Panama, "spoiled" the quarter, Sytchev said.
Excluding Infrastructure Concession Investments, which is the company's investment and financing unit, profit was C$18.6 million during the quarter, lower than the C$41.2 million reported for the same period a year ago.
Revenues rose by 6.3 percent to C$1.9 billion.
The results missed the 49 Canadian cents per share adjusted that analysts had been expecting, according to Thomson Reuters I/B/E/S.
SNC reiterated its 2013 outlook, saying it expected annual net income growth of between 10 percent and 15 percent.