TORONTO (Reuters) - Canada’s SNC-Lavalin Group Inc (SNC.TO), one of the world’s largest construction and engineering companies, reported a quarterly loss on Friday as cost overruns continued to hit results.
The Montreal-based company, which is trying to recover from a far-reaching corruption scandal last year that toppled senior executives, had warned of the loss in mid-October, when it slashed its 2013 outlook for a second time.
SNC, which announced a turnaround strategy in early May, stuck with its October financial forecasts on Friday. It expects net income of C$10 million to C$50 million for 2013, which was a hefty revision from its previous estimate of C$220 million to C$235 million.
The company said 2013’s poor performance has been due to a number of obstacles. These include difficulties in its infrastructure and environment division and in its oil and gas unit, a soft commodity market that has dented mining and metallurgy results, and charges tied to a reorganization of its European operations.
“The decisions we have made during the third quarter, while difficult, were necessary,” Chief Executive Robert Card said in a statement.
“The impact of the most recent extensive evaluation and analysis of our ongoing projects and the implementation of our globalization program should reduce future earnings volatility and restore our selling, general and administrative expenses to historical levels.”
The net loss for the third quarter was C$72.5 million, or 48 Canadian cents a share, compared with net income of C$113.9 million, or 75 Canadian cents a share, in the year-before quarter.
Revenue was C$1.95 billion, down slightly from C$1.98 billion in the third quarter of last year.
Analysts had expected a loss of 47 Canadian cents a share and revenue of C$1.96 billion, according to Thomson Reuters I/B/E/S.
Excluding results from the company’s concession business, SNC reported a loss of C$128.4 million, compared with net income of C$83.1 million in the year-before quarter. Among the concession business’s operations is managing the 407 express toll highway that parallels the northern boundary of Toronto, Canada’s largest city.
SNC said a change to cost forecasts for some unprofitable legacy fixed-price contracts, particularly in the hospital and road sectors, and a revised forecast for some power segment contracts, including one in North Africa, hurt results.
Restructuring costs and other charges from its European reorganization totaled $68.2 million.
SNC stock was up 51 Canadian cents at C$44.32 at midmorning on Friday on the Toronto Stock Exchange. SNC shares have recovered most of their losses since the company issued its profit warning last month.
Editing by Jeffrey Hodgson; and Peter Galloway