* Aecon CEO says construction sector entering “super cycle”
* Aecon fourth-quarter results easily beat expectations
* Stock rises as much as 2.6 percent
* CEO sees private sector funding up if govt cuts back
March 6 (Reuters) - Shares in Aecon Group Inc rose on Tuesday, a rare bright spot on a sharply lower Toronto stock market, after Canada’s biggest construction company reported quarterly earnings that easily beat expectations and forecast 2012 would be even stronger.
After a period of significant volatility following the global economic downturn of 2008-09, Canada’s construction industry has now entered “a super cycle”, Aecon Chief Executive John Beck said on a conference call to discuss the company’s fourth-quarter results, which were released overnight.
“Aecon’s outlook entering 2012 is as positive as it has been in years,” Beck said. “Backlog is growing. Our core transportation, resources and power sectors have strong bidding pipelines.”
Canada’s construction boom is being fueled by new projects in the Alberta oil sands, major hydroelectric projects planned for Ontario and Quebec, the 2015 Pan American Games in Toronto and urban transportation improvements across the country, according to a 2011 report sponsored by consulting company PwC.
The report forecast that by 2020 Canada would be the world’s fifth biggest construction market behind China, India, the United States, and Japan. It is in seventh position now.
Aecon reported a 143 percent rise in quarterly earnings to C$36.7 million ($36.64 million) in the three months to end-December as margins improved on lower costs.
The strong results and outlook led at least two brokerages, Desjardins and Raymond James, to raise their recommendations on the stock to “buy” and “strong buy”, respectively.
Beck said he believed the private sector would step up as financiers if Canadian provincial governments, notably Ontario, the country’s biggest economy, cap spending as they grapple with budget deficits.
Provincial governments are traditionally big financiers of large infrastructure projects, but increasingly those projects are being financed in partnership with the private sector, he said.
If governments “feel some pinch on their budgets, this private sector, I think, will be able to step in,” Beck said.
Aecon’s shares rose as high as 2.6 percent to C$12.47 on the Toronto Stock Exchange on Tuesday. By comparison, the market’s main index was down around 1.8 percent.
$1=$1.00 Canadian Reporting By Nicole Mordant Editing by Peter Galloway