* Net income, excluding ICI, down 33 pct; below consensus
* Expects 2013 growth of 10-15 pct
* Reports EPS of C$0.63 vs C$0.50; consensus of C$0.90
* Raises dividend by 4.5 pct to C$0.23
* Shares fall as much as 8 pct
By Solarina Ho
March 8 Canada's SNC Lavalin Group Inc
reported a 24 percent rise in fourth-quarter profit on Friday,
but its shares fell as much as 8 percent after the earnings and
its 2013 outlook fell short of analysts' expectations.
Excluding SNC-Lavalin Capital, the construction and
engineering company's investment and financing arm, profit fell
33 percent, with earnings per share far below analysts'
SNC, one of the world's largest engineering companies,
expects net income to rise between 10 percent and 15 percent
this year compared with last year.
"It was surprisingly low. Hopefully conservative," said
Canaccord Genuity analyst Yuri Lynk, adding the first half of
2013 was likely to be weak. "I do see more upside than downside
risk, but certainly it is what it is and it's almost, I'm not
afraid to say, shockingly low."
SNC shares closed at C$43.01 on the Toronto Stock Exchange,
down 6.2 percent. It hit a low of C$42.16 earlier on Friday.
The 102-year-old company said its hydrocarbons and chemicals
segment will continue to be challenging throughout this year,
while the mining and metallurgy division could be affected by
PUTTING THE HOUSE IN ORDER
SNC, which has been at the center of an ever-widening ethics
and corruption scandal of former executives, said it is
implementing a compliance plan.
"Much of our attention has been dedicated to putting our
house in order and reinforcing our commitment to ethics,
excellence, safety compliance and project delivery," chief
executive Robert Card told analysts during a conference call.
"It is a work in progress that will continue to be a high
priority through 2013."
More than a year ago, the company revealed it had uncovered
tens of millions of dollars in mysterious payments. Former chief
executive Pierre Duhaime resigned last year amid the scandal and
faced new fraud-related charges last
The company recently hired a former Siemens AG compliance
officer to help guide it through the scandal and said on Friday
that the fall-out will likely result in extra costs and impact
the company for the balance of the year.
Canaccord analyst Lynk noted that a number of projects
booked by the prior management were not making any money and
would likely not have been signed under the current management.
Net income rose to C$94.6 million ($92 million), or 63
Canadian cents per share, from C$76.0 million, or 50 Canadian
cents per share, a year earlier, helped by growth in its
services and packages business.
That was below the 90 Canadian cents expected by analysts,
according to Thomson Reuters I/B/E/S.
Excluding infrastructure concession investments, net income
was C$24.2 million, compared with C$36.5 million a year earlier.
Analysts said that translated to an earnings per share of 16
Canadian cents, well below a consensus of 50 Canadian cents.
SNC said the decline reflected higher selling, general and
administrative expenses, while fourth-quarter gross margin also
included unfavorable cost re-forecasts on two major projects.
Revenue rose 14.3 percent to C$2.4 million.
The firm increased its quarterly dividend by 4.5 percent to
23 Canadian cents a share from 22 Canadian cents.
"While disappointed about the results for 2012 and the
fourth quarter, I'm pleased with the progress we've made in
rebuilding the company," Card added.