SNC-Lavalin reports loss on charges in North Africa
By Solarina Ho
TORONTO (Reuters) - Canada's SNC-Lavalin Group Ltd SNC.TO unexpectedly reported a quarterly net loss and lowered its financial forecast for the year on Friday following charges on projects in two North African countries.
The company's shares fell 6 percent to C$40.44 on the Toronto Stock Exchange.
The Montreal-based company, one of the world's largest construction and engineering companies, said results reflected operating losses at its oil and gas unit for a project in Algeria and at its infrastructure and environment business for a halted project in Libya.
"Due to a variety of unexpected factors, such as the ones (we) have experienced in the second quarter in North Africa, 2013 is proving to be a very challenging year for the company," Chief Executive Robert Card said in a statement.
SNC, which is trying to move forward from a series of corruption and ethics misconduct cases, said it is in talks with a client who made a C$70.1 million claim alleging late penalties under a fixed-price project in Algeria.
The company also recorded a C$47 million risk provision, following an unexpected attempt to draw on letters of credit relating to a project that has been halted due to civil unrest in Libya. SNC said it was unaware of any claim and would use all legal means to prevent any draws.
"North Africa, Middle East - still very difficult markets," Maxim Sytchev, a senior analyst at Dundee Capital Markets, said. "The company cannot step away from a difficult project, they have to finish it. So that's exactly what they're going through right now.
"It's been a number of disappointments back to back." Continued...