SNC Lavalin profit sinks, cuts outlook on higher costs
By Susan Taylor
TORONTO (Reuters) - SNC Lavalin Group Inc (SNC.TO: Quote), a Canadian construction and engineering company caught up in allegations of improper payments and bribery, said on Friday massive project cost overruns led a sharp drop in quarterly profit and forced it to cut its outlook.
Shares of the company, whose CEO resigned in the fall-out from its corporate misconduct scandal, fell 5 percent after the results. That extends a slide of more than 60 percent since SNC first announced mystery payments in February.
The troubled company said the global economic slowdown has slowed the demand for bids in some parts of its business, notably mining, and that its order backlog may wane in the next two quarters.
Investors have been nervously watching the company's financial results and forecasts for signs that its business has been hurt by revelations that it made $56 million in payments to unknown agents on construction projects that did not exist.
"The miss in the quarter pertains to weaker than expected execution and not the issues that plagued the company since the departure of (CEO) Pierre Duhaime," said AltaCorp Capital analyst Maxim Sytchev.
"If the actual results continue to lag relative to the again-dialed down expectations, (the) probability of an activist-type shareholder participation increases dramatically."
"VOLATILE AND RISKY"
The Montreal-based company said second-quarter net income sank to C$32.5 million ($32.4 million), or 21 Canadian cents a share, from C$102 million, or 67 Canadian cents, a year earlier. Continued...