TORONTO (Reuters) - SNC-Lavalin Group Inc (SNC.TO), Canada’s largest engineering and construction company, reported quarterly earnings that exceeded expectations on Thursday and raised its 2014 forecast in light of a C$3.2 billion ($2.94 billion) deal to sell its AltaLink electricity transmission system.
The Montreal-based company now expects earnings of C$2.80 to C$3.05 a share this year, up from its previous forecast of C$2.25 to C$2.50.
SNC shares were up more than 3 percent at C$53.33 on the Toronto Stock Exchange.
The company cautioned, however, that it is still not over all the obstacles it faced in 2013, including problems at projects initiated by previous management and the softer commodity markets that have hit its mining and metallurgy units.
SNC’s former chief executive, Pierre Duhaime, resigned in 2012 following the discovery of $56 million in missing funds and was later arrested. He was among several executives accused of committing fraud and other criminal offenses in a scandal that stretched from Montreal to Tripoli.
The company’s net income for the first quarter ended March 31 was C$94.7 million, or 62 Canadian cents a share, significantly higher than the C$53.7 million, or 35 Canadian cents, it earned in the year-before quarter. Much of the increase, however, resulted from the reversal of a previously recorded risk provision.
Revenue was C$1.72 billion, down from C$1.90 billion earned in the first quarter of last year.
Analysts, on average, had expected earnings per share of 46 Canadian cents and revenue of 1.82 billion, according to Thomson Reuters I/B/E/S.
Last week, SNC announced that it will sell its Alberta-based electricity transmission system, AltaLink, to Berkshire Hathaway Inc’s (BRKa.N) energy unit. The company’s revised forecast for 2014 fulfills an accounting requirement following the AltaLink sale, but it does not include the company’s eventual gain from the sale.
Speculation has turned toward what SNC might do with the cash. Company officials have said that 2014 will be a year of rebuilding and consolidation, and that acquisitions are a part of its growth strategy, but have yet to announce specific plans.
Reporting by Solarina Ho, Editing by Franklin Paul; and Peter Galloway