TORONTO (Reuters) - Scandal-mired SNC Lavalin Group Inc (SNC.TO) reported a disappointing profit on Thursday as it laid out a growth strategy that would see it liquidate some infrastructure investments and focus on the lower risk markets of North and South America.
SNC, one of the world’s largest construction and engineering companies, said under the new strategy the Montreal-based firm would leverage its expertise in resources, exit investments at maturity, potentially sell non-core assets and reduce its equity stakes in large investments in the medium term.
Some of the company’s investments include overseas airports, rail, power, healthcare centers and highways.
“We believe the market will deem the strategic review and especially the eventual exit from mature concessions as a positive,” said Maxim Sytchev, an analyst with Dundee Securities, in a research note.
“The same goes to de-risking company’s profile by re-focusing on North and South America.”
SNC, which did not give a specific time frame for the strategy, is trying to move forward from a series of corruption and ethics scandals involving former top executives after it uncovered tens of millions of dollars in mysterious payments more than a year ago.
Most recently, it reached a confidential settlement with the World Bank that excludes it from bidding on bank-sponsored projects for up to 10 years.
Chief Executive Robert Card, who took over in October, said on Thursday that shareholders should not worry about a repeat of such events.
“Lessons have been learned,” he told investors at his first annual meeting as top executive. Some of the scandals occurred in business in the Middle East and Africa.
Shares fell 4.7 percent to C$41.39 early afternoon on the Toronto Stock Exchange as results fell short of expectations.
Net income was C$53.6 million ($53.17 million), or 35 Canadian cents per share, down from C$66.3 million, or 44 Canadian cents per share, a year earlier.
Two projects in mining and infrastructure and environment, including one in Panama, “spoiled” the quarter, Sytchev said.
Excluding Infrastructure Concession Investments, which is the company’s investment and financing unit, profit was C$18.6 million during the quarter, lower than the C$41.2 million reported for the same period a year ago.
Revenues rose by 6.3 percent to C$1.9 billion.
Results missed the 49 Canadian cents per share adjusted that analysts had been expecting, according to Thomson Reuters I/B/E/S.
SNC reiterated its 2013 outlook, saying it expected annual net income growth of between 10 percent and 15 percent.
($1 = $1.0082 Canadian)
Editing by Jeffrey Hodgson and Kenneth Barry