October 28, 2009 / 11:06 AM / in 8 years

UPDATE 2-Canam Q3 profit slumps 71 pct

* Q3 EPS C$0.10 vs est C$0.15

* Sales fall 34 pct to C$144.7 mln

* Gets contract worth over C$100 mln

* Shares down more than 2 percent (Adds details, analysts’ comments)

By R. Manikandan

BANGALORE, Oct 28 (Reuters) - Construction products maker Canam Group Inc CAM.TO reported a 71 percent drop in quarterly profit, which also came in below market expectations, as the economic downturn continues to hammer the construction sector.

For the third quarter ended Sept. 26, Canam posted net earnings of C$4.4 million, or 10 Canadian cents a share, down from C$15.0 million, or 30 Canadian cents a share, a year ago.

Sales fell 34 percent to C$144.7 million.

Analysts were expecting earnings of 15 Canadian cents a share on revenue of C$191.9 million, according to Thomson Reuters I/B/E/S.

The company ended the quarter with cash and cash equivalents of C$66.5 million, compared with C$13.2 million in the same period last year.

Although the analysts expressed disappointment with the company’s results, the rise in its cash position took them completely by surprise.

“Their cash position is good. If they have cash they could make acquisitions or increase the dividend, which I think they will be doing,” analyst David Brill at Salman Partners told Reuters.

Analyst Luri Lynk of Canaccord Adams said the company’s balance sheet was exceptionally strong and that it was well positioned to weather this downturn.

Separately, the company said its Structal-Heavy Steel Construction unit received a letter of intent from PCL Constructors Westcoast Inc regarding a C$100 million contract for the construction of a new roof on the BC Place Stadium in Vancouver.

As at Sept 26, Canam’s combined order backlog stood at C$290 million, compared with C$340 million a year ago.

“The backlog is stable and is growing. C$290 million is a fairly good number and these new contracts will make it jump up,” analyst Brill said.

Canam operates 12 plants specialized in the design and fabrication of construction products such as welded beams, joists and girders.

The company has about 3,000 employees in Canada, the United States, Romania and India, and has partnerships with companies in China, France, Mexico, Russia, Saudi Arabia and the United Arab Emirates.

Canam shares were down 2 percent at C$6.80 in Wednesday morning trade on the Toronto Stock Exchange. (Reporting by R. Manikandan in Bangalore; Editing by Ratul Ray Chaudhuri)

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