SNC Lavalin profit falls less than expected, shares up
By Nicole Mordant
(Reuters) - Canadian construction and engineering company SNC Lavalin Group Inc SNC.TO, under investigations for alleged bribery, on Friday 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 investigating.
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 2013.
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 October 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. Continued...