MONTREAL (Reuters) - Canada’s SNC-Lavalin Group Inc (SNC.TO) posted a better-than-expected adjusted profit for the fourth quarter and said profit at its core engineering and construction business in 2016 would be higher than in 2015.
Chief Executive Officer Neil Bruce had said in November he expected “flattish” revenues next year, as SNC prepared to cut costs to help hit 2017 margin targets in a weaker economy.
Bruce, who succeeded Robert Card in October, had at the time also announced a sweeping cost-cutting program to help deliver an annualized EBITDA margin of 7 percent in the company’s energy and construction business. On Thursday, Bruce said the program should reduce SNC’s 2016 expenses by about C$100 million.
Bruce told analysts SNC is focused on the Middle East, with the oil and gas and power sectors serving as the company’s main contributors to net income, despite being “under margin pressure” given weak energy prices.
Bruce also said SNC is looking to grow through acquisitions, but not in the short-term.
“It’s a key part of the five year strategy but you won’t hear us talking about acquisitions much during the first half of this year,” Bruce said.
Adjusted profit at the business rose to 44 Canadian cents per share in the three months ended Dec. 31, from 15 Canadian cents per share a year earlier. The business accounted for 65 percent of SNC’s total adjusted profit.
The company said it expected adjusted earnings from the business to rise to C$1.50-C$1.70 per share this year from C$1.34 in 2015.
SNC also raised its quarterly dividend by 1 Canadian cent to 26 Canadian cents per share.
Net income attributable to SNC was C$49.2 million ($36.7 million), or 33 Canadian cents per share, in the fourth quarter.
It earned C$1.15 billion, or C$7.51 per share, in the year-ago quarter, which included a C$1.32 billion gain on the sale of its interest in electricity transmission company AltaLink.
Excluding items, SNC earned 67 Canadian cents per share in the latest quarter, beating the average analyst estimate of 42 Canadian cents, according to Thomson Reuters I/B/E/S.
Montreal, Quebec-based SNC’s revenue fell 6 percent to C$2.65 billion.
Reporting By Allison Lampert in Montreal and Anet Josline Pinto in Bengaluru; Editing by Saumyadeb Chakrabarty, Savio D'Souza and David Gregorio