SNC Lavalin, dogged by old projects, misses in second-quarter
By Solarina Ho
TORONTO (Reuters) - SNC-Lavalin Group Inc (SNC.TO: Quote), Canada’s largest engineering and construction firm, on Friday reported a return to profit in the second quarter that fell sharply below analysts' expectations as problematic, old projects started by previous management continued to hurt the bottom line.
The Montreal-based company has been trying to move past a far-reaching scandal involving allegations of fraud and bribery, and to deal with a remaining backlog of more than C$600 million in challenging projects.
Shares, which had climbed about 20 percent since the start of the year, fell 3.1 percent to C$56.83 on the Toronto Stock Exchange.
The company announced during the quarter that it will buy resource-sector engineering group Kentz Corp for $2 billion to help accelerate its turnaround plan and expand its high-growth and high-margin operations in the oil and gas industry.
Net income was C$32.1 million, or 21 Canadian cents a share, compared with a loss of C$37.5 million, or 25 Canadian cents a share, a year earlier when it took sizable charges related to older projects.
The firm said overall revenue was C$1.7 billion, lower than the C$1.9 billion a year ago.
Analysts had been expecting earnings of 63 Canadian cents a share and revenue of C$1.8 billion, according to Thomson Reuters I/B/E/S.
Net loss from the company's Engineering & Construction, and Operations & Maintenance units narrowed to C$47.9 million during the quarter. Last year, it reported a net loss of C$104.7 million for those units. Continued...