August 4, 2009 / 10:27 PM / 9 years ago

UPDATE 1-Aecon earnings slide on oil sands slowdown

* Second-quarter net income down 37 percent

* Infrastructure and industrial businesses hard hit

* Revenues, backlog hit record levels

VANCOUVER, British Columbia , Aug 4 (Reuters) - Aecon Group Inc (ARE.TO) posted a 37 percent drop in second-quarter profit on Tuesday, hit by a slowdown in construction work in Western Canada, notably in Alberta’s oil sands.

Canada’s biggest publicly traded construction and infrastructure developer reported net income of C$9.9 million ($9.2 million), or 18 Canadian cents a share, in the three months to the end of June.

That compared with a profit of C$15.6 million, or 31 Canadian cents a share, a year ago.

Analysts, on average, forecast a profit of 26.5 Canadian cents a share, according to Reuters Estimates.

Second-quarter revenues reached a record C$613 million from C$438 million a year ago, mostly due to the recent acquisitions of Lockerbie & Hole, an Edmonton, Alberta-based mechanical and industrial contractor, and construction firm South Rock, also based in Alberta.

Toronto-based Aecon ended the second quarter with a backlog of a record C$1.66 billion.

Aecon’s operating profit in its infrastructure segment, which includes the building of highways, bridges and power projects, was almost halved because of lower margins from its operations in Alberta.

Operating profit in its industrial operations, which include in-plant construction, fell because of a “significant reduction in oil sands related work”, Aecon said in a statement.

The company’s other two segments, buildings and concessions, posted higher operating profits.

“The positive indicators Aecon identified at the beginning of the year, including a healthy backlog, a strong balance sheet and a robust bidding pipeline, continue to provide reason for optimism,” said Scott Balfour, President and Chief Financial Officer of Aecon in a statement.

“We currently have the strongest civil infrastructure bidding pipeline in many years and, while market conditions in the oil sands have dampened our expectations somewhat regarding the current year contribution from Lockerbie, we feel very good about the medium-term outlook for the industrial segment generally and Lockerbie in particular,” he said.

Aecon’s shares closed up 12 Canadian cents at C$10.21 on the Toronto Stock Exchange on Tuesday. The results were released after the market closed. The stock is down about 30 percent over the past year.

$1=$1.07 Canadian Reporting by Nicole Mordant; editing by Rob Wilson

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