March 2, 2017 / 12:54 PM / in 2 years

Canada's SNC-Lavalin posts better-than-expected profit

(Reuters) - Canada’s SNC-Lavalin Group Inc (SNC.TO) reported a better-than-expected quarterly profit and forecast a higher adjusted profit for 2017 from its core engineering and construction business.

The company said it expects 2017 adjusted profit of C$1.70-C$2.00 per share from its core business, compared with C$1.51 reported for 2016.

Last year, SNC undertook a sweeping cost-cutting program in a bid to boost margins in the core business.

Montreal-headquartered SNC said in 2016 it was targeting a core EBITDA margin of 7 percent in 2017. A company spokesman said on Thursday the margin remains a target for SNC this year.

“We’re not shying away from the targets that we expect inside the business,” SNC Chief Executive Officer Neil Bruce told analysts on an afternoon conference call.

Bruce said the company sees opportunities for organic growth in its infrastructure business in Canada, where it is shortlisted for several contracts, and improved oil and gas margins through work in the United States and Middle East.

The company’s outlook does not include potential opportunities in the United States stemming from President Donald Trump’s promised $1 trillion infrastructure program, which Bruce said, “would all be upside.”

Bruce said SNC is considering growth through acquisitions, but has not yet found a target.

“If the right thing comes along we’d be ready to go,” he said.

The company said on Thursday that total selling, general and administrative expenses fell by C$99 million ($74 million) in 2016, compared with its target of C$100 million.

Excluding items, the company earned 49 Canadian cents per share in the fourth quarter ended Dec. 31.

Analysts on average had expected a profit of 47 Canadian cents per share, according to Thomson Reuters I/B/E/S.

SNC’s revenue fell 16.4 percent to C$2.21 billion, below analysts’ estimates of $C2.40 billion largely due to weaker-than-expected revenues from its oil and gas division.

SNC also raised its quarterly dividend by 5 percent to 27.3 Canadian cents per share.

SNC shares closed up 0.27 percent in Toronto trading.

Reporting by John Benny in Bengaluru; Editing by Maju Samuel, Bernard Orr

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