SNC-Lavalin posts better-than-expected profit, stock up
By Allison Lampert
MONTREAL (Reuters) - Canada's SNC-Lavalin Group Inc (SNC.TO: Quote) reported a better-than-expected quarterly profit on Thursday, helped by strength in its core engineering and construction business and lower costs.
Shares in the Montreal-based company closed up more than 3 percent at C$57.62 after the results and comments from executives.
Chief Executive Neil Bruce said on a conference call that SNC had no current plans to sell its stake in Ontario's 407 toll highway.
In June, Reuters reported SNC was facing internal pressure from shareholder Canadian hedge fund West Face Capital to sell the stake. SNC owns about 17 percent of the 407, which many investors see as a non-core asset.
"We don't have a process, or plans at this stage to have a process to monetize the 407," he said on the call. "We don't see any potential M&A (merger and acquisition) activity in the future necessarily being linked to the sale of 407."
SNC is undertaking a sweeping cost-cutting program expected to help lower 2016 expenses by about C$100 million ($77 million) and boost margins in its core business as clients cut spending due to low commodity prices.
Chief Financial Officer Sylvain Girard said that he expected SNC's net cash flow generated from operating activities, now at negative C$322 million, would either break even, or become positive by the end of 2016.
Earlier in the day, the company said total selling, general and administrative expenses decreased by 10.1 pct in the second quarter, from a year earlier. Continued...