By Solarina Ho
TORONTO May 2 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
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
SNC reiterated its 2013 outlook, saying it expected annual
net income growth of between 10 percent and 15 percent.