UPDATE 1-SNC-Lavalin shares sink on profit warning
(Adds analysts comments, updates stock, adds detail on financials and background on corporate scandal)
By Susan Taylor
TORONTO Oct 16 (Reuters) - Shares of embattled Canadian construction and engineering company SNC-Lavalin Group Inc tumbled as much as 7 percent on Wednesday, after the company again slashed its 2013 profit forecast, raising worries about its recovery.
SNC, which has struggled in the wake of a far-reaching corruption and ethics scandal that toppled senior executives, primarily blamed cost overruns on fixed-price contracts in North Africa and its hospital and roads division signed between 2010 and 2012.
The company cited those contracts for the weaker outlook, along with a C$75 million ($72 million) charge for a European reorganization and weak mining demand. It marks the second time SNC has cut its 2013 profit forecast since the estimate was announced in March.
Shares of Montreal-based SNC were down 5.1 percent at C$41.85 on the Toronto Stock Exchange on above-average volume.
Shares have slipped some 13.5 percent since late February 2012, just before the company announced it was investigating mystery payments for certain construction projects.
Analysts said that management may see the hefty one-time charges as the means to a fresh start. Chief Executive Officer Robert Card took the helm last October and Chief Financial Officer Alain-Pierre Raynaud was named in April.
"It kind of cleanses the palate, so to speak, for the new management team to really show what they can do and not be saddled by contracts that have been signed by previous management," said Morningstar analyst Todd Wenning. Continued...