November 4, 2011 / 1:38 PM / 7 years ago

UPDATE 5-SNC-Lavalin earnings slip, revenues rise

* Q3 2011 EPS C$0.83 vs $0.84 in 2010

* Revenue up 18 pct at C$1.78 billion

* Shares down 3.4 percent in Toronto (Adds details on Libya from conference call)

TORONTO, Nov 4 (Reuters) - SNC-Lavalin Group Inc’s (SNC.TO) quarterly profit fell slightly from a year earlier, when it took a one-time gain, but was helped by higher revenues across all its activities, the company said on Friday.

Analysts said the results were in line with expectations.

“A lot of SNC’s peers missed their quarters, so relatively speaking, it’s a nice performance,” said Canaccord Genuity analyst Yuri Lynk.

“There was strength in everything, except for the infrastructure and environment group, which had a really tough comparable from last year.”

SNC-Lavalin’s competitors include U.S.-based Jacobs Engineering Group Inc (JEC.N) and Fluor Corp (FLR.N).

Canada’s biggest engineering company posted net income of C$125.6 million ($123.1 million), or 83 Canadian cents a share, in the third quarter, ended Sept. 30. That compared with C$128.1 million, or 84 cents a share, a year earlier.

The 2010 quarter included a C$19.6 million gain from the sale of an asset. Excluding that gain, earnings rose 15.8 percent in the latest period. Revenue rose 18 percent to C$1.78 billion.

The company’s revenue backlog at the end of September was C$9.4 billion, down from C$9.7 billion at the end of December. Backlog in the services sector hit an all-time high.

“The key to this quarter and I think what the market is going to ultimately reward SNC for is the huge backlog that they have on the services side,” said Raymond James analyst Frederic Bastien.

He noted that services contracts tend to be low risk and have very high margins.

Bastien said one disappointment was that the company’s oil and gas business.

“The reality is that they haven’t built as strong a backlog in that particular market segment, and in my opinion that can only get better,” he said.

The company said it expects 2011 net income to be in line with 2010, excluding gains associated with the disposal of some assets and investments in 2010.


SNC also said it was looking to soon restart operations in Libya that were suspended during the North African country’s civil war.

“The situation there has reached a turning point, and we hope to be able to return soon,” Chief Executive Pierre Duhaime said on a conference call.

SNC’s halted projects in the country include a prison, a water pipeline and an airport. The firm began evacuating workers in February, and has yet to set a date for its return.

“The country is in desperate need of all kinds of infrastructure even more now than before,” said Duhaime.

“Once we are confident we will be working in a safe and secure environment, we should be able to get back to work quite quickly.”

SNC shares were down 3.5 percent at C$50.03 on Friday afternoon on the Toronto Stock Exchange.

$1=$1.02 Canadian Reporting by Allison Martell; editing by Rob Wilson

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