* Maintains full-year forecast
* Mining, better execution boost earnings
* Revenue up 11 pct, though backlog dips
* SNC under new CEO since Oct. 1
* CEO says will unveil strategy by May 2013
By Nicole Mordant
Nov 2 Canadian construction and engineering
company SNC Lavalin Group Inc, under investigations for
alleged bribery, on Fr iday reported a narrower-than-expected 8
percent decline in third-quarter profit, and its shares rose
nearly 5 percent.
One of the world's largest engineering operations, the
company maintained its forecast for full-year earnings after
cutting it last quarter.
"We are quite encouraged and relieved," said Frederic
Bastien, an analyst with Raymond James based in Vancouver.
"The fact that they are reaffirming their guidance for the year
implies a good quarter for the fourth quarter."
The results were welcomed by SNC shareholders, who in the
past year have contended with the resignation of the company's
chief executive. The company has accused Pierre Duhaime of
authorizing $56 million in payments to unknown agents on
nonexistent construction projects. Canadian police are
They are also investigating bribery allegations against SNC
executives in respect to a US$1.2 billion bridge project in
Bangladesh. The World Bank has suspended its loan for the
development and temporarily banned an SNC subsidiary from
bidding on its contracts in the country.
New CEO Robert Card said on a conference call that it was
too early for him to lay out a detailed strategy for the
Montreal-based company, but that he hoped to do that "some time
next year, certainly by the annual meeting," to be held in May
Card, who was a long-time executive with CH2M Hill Cos Ltd,
a U.S. engineering and construction company, took the top job at
SNC on Oct. 1.
Card said he had found some areas where the century-old,
Montreal-based company could make improvements, including
reducing its reliance on non-company agents to help to carry out
its work in the 100-plus countries where it operates. Instead,
Card wants to move more company executives to foreign offices.
Shares in SNC, which at one point this year were down more
than 60 percent in value, closed C$1.89 firmer at C$42.17 on the
Toronto Stock Exchange.
The company said its net income attributable to shareholders
fell to C$114.9 million (US$115.21 million), or 76 Canadian
cents per share, in the three months to the end of September due
to weaker performances in its infrastructure and environment
businesses. That was well above the 64 Canadian cents per share
that analysts, on average. were expecting, according to Thomson
Reuters I/B/E/S data.
The company's mining business in particular performed far
better than expected.
"This is a business that has been winning a number of
contracts ... but we haven't seen that translate into better
results. It is finally hitting the bottom line now,"
Revenue rose 11 percent to C$2.0 billion in the third
quarter, although its backlog fell to C$9.9 billion at the end
of September from $10.1 billion at the end of December 2011.
The company reaffirmed its forecast for full-year earnings
of C$325 million to C$340 million.
Maxim Sytchev, an analyst at AltaCorp Capital in Toronto,
said, "When I spoke to clients before the quarter, there was a
sense that the business was disintegrating. But we are not
seeing that, which is a definitely very positive dynamic."