March 27, 2012 / 1:26 AM / 8 years ago

SNC-Lavalin says CEO quits; finds accounting issues

(Reuters) - SNC-Lavalin Group Inc said its Chief Executive Pierre Duhaime resigned after the company said it had identified material weaknesses in its internal control over financial reporting.

A pedestrian walks past the SNC-Lavalin Group Inc., headquarters in Montreal, May 7, 2009. SNC-Lavalin Group Inc reported a nearly 10 percent increase in first-quarter profit on Thursday, as the big Canadian engineering and construction company recorded larger gains from infrastructure concession investments such as toll roads. REUTERS/Christinne Muschi

In February, the Canadian engineering and construction company had said it expected to record payments of about C$35 million “relating to certain payments” in the fourth quarter that were linked to construction projects that were unrelated to the expenses.

At that time, it had revealed a probe into the mysterious payments and warned that the impact of Libya’s civil war would push its 2011 profit well below earlier forecasts.

The news had stripped the company of almost 20 percent of its market value by early March.

On Monday, the company said based on the findings of the independent review, it does not believe that these payments are related to Libya.

The company said Ian Bourne, who has been a director since 2009, will take over as the interim CEO. A search for a new CEO will begin immediately, the company said.

SNC, which had delayed releasing its quarterly and full-year results, reported a 52 percent drop in fourth-quarter profit.

Montreal-based SNC’s net income attributable to shareholders was down at C$76.0 million ($76.13 million), or 50 Canadian cents per share, from C$158.7 million, or C$1.04 per share, a year ago.

The drop was mainly due to an operating loss at its infrastructure and environment and the hydrocarbons and chemicals units, the company said.

Revenue, however, rose 16 percent to C$2.12 billion.

The company, which raised its fourth-quarter cash dividend by 4.8 percent, expects 2012 profit to be flat.

Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila

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