(Adds earnings details, background and market reaction)
TORONTO May 8 SNC-Lavalin Group Inc,
Canada's largest engineering and construction company, reported
quarterly earnings that exceeded expectations on Thursday and
raised its 2014 forecast in light of a C$3.2 billion ($2.94
billion) deal to sell its AltaLink electricity transmission
The Montreal-based company now expects earnings of C$2.80 to
C$3.05 a share this year, up from its previous forecast of
C$2.25 to C$2.50.
SNC shares were up more than 3 percent at C$53.33 on the
Toronto Stock Exchange.
The company cautioned, however, that it is still not over
all the obstacles it faced in 2013, including problems at
projects initiated by previous management and the softer
commodity markets that have hit its mining and metallurgy units.
SNC's former chief executive, Pierre Duhaime, resigned in
2012 following the discovery of $56 million in missing funds and
was later arrested. He was among several executives accused of
committing fraud and other criminal offenses in a scandal that
stretched from Montreal to Tripoli.
The company's net income for the first quarter ended March
31 was C$94.7 million, or 62 Canadian cents a share,
significantly higher than the C$53.7 million, or 35 Canadian
cents, it earned in the year-before quarter. Much of the
increase, however, resulted from the reversal of a previously
recorded risk provision.
Revenue was C$1.72 billion, down from C$1.90 billion earned
in the first quarter of last year.
Analysts, on average, had expected earnings per share of 46
Canadian cents and revenue of 1.82 billion, according to Thomson
Last week, SNC announced that it will sell its Alberta-based
electricity transmission system, AltaLink, to Berkshire Hathaway
Inc's energy unit. The company's revised forecast for
2014 fulfills an accounting requirement following the AltaLink
sale, but it does not include the company's eventual gain from
Speculation has turned toward what SNC might do with the
cash. Company officials have said that 2014 will be a year of
rebuilding and consolidation, and that acquisitions are a part
of its growth strategy, but have yet to announce specific plans.
(Reporting by Solarina Ho, Editing by Franklin Paul; and Peter