SNC Lavalin shares down as results, outlook fall short

Fri Mar 8, 2013 5:56pm EST
 
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By Solarina Ho

(Reuters) - Canada's SNC Lavalin Group Inc (SNC.TO: Quote) 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' expectations.

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 weaker commodities.

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.   Continued...

 
The head office of SNC Lavalin seen in downtown Montreal March 26, 2012. REUTERS/Christinne Muschi