November 3, 2010 / 4:33 PM / 8 years ago

Aecon shares slide 10 pct as earnings disappoint

* Q3 EPS C$0.27 vs analyst expectations of C$0.37

* Industrial, buildings division drag on earnings

* Stock falls as low as C$10.90

VANCOUVER, Nov 3 (Reuters) - Shares in Aecon Group Inc (ARE.TO) slumped 10 percent on Wednesday after quarterly earnings from Canada’s biggest construction company were well below expectations.

Aecon reported net income of C$17.2 million ($17 million), or 27 Canadian cents a share, late on Tuesday for the three months to Sept 30. That was down from C$19.6 million, or 35 Canadian cents a share, from a year earlier and also below the 37 Canadian cents a share that analysts had expected.

Earnings were depressed by operating losses in the group’s buildings and industrial divisions, Aecon said, even as its infrastructure division performed strongly and the backlog of work rose from a year ago.

“While the industrial loss is a negative surprise this quarter, the segment has been a solid performer and will likely provide the necessary torque when private markets recover fully over the 2011-2013 timeframe,” NCP Northland Capital Partners analyst Maxim Sytchev said.

“The buildings segment, on the other hand, has some legacy projects that will continue to compress its margins. More importantly, the lack of clarity on the buildings segment front impairs Aecon’s trading multiples, in our opinion,” Sytchev said in a note to clients.

Group revenue rose C$93 million to C$800 million in the quarter, ahead of the C$775 million that analysts forecast. Aecon’s backlog of work reached a third-quarter record of C$2.5 billion, up 31 percent on a year ago.

Aecon’s shares fell as low as C$10.90 on the Toronto Stock Exchange on Wednesday morning, a loss of 10.3 percent or C$1.25.

$1=$1.01 Canadian Reporting by Nicole Mordant; editing by Rob Wilson

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