March 4, 2009 / 1:49 PM / in 8 years

UPDATE 2-Aecon profit tops estimates, sees strong 2009-10

* Q4 EPS C$0.40 vs C$0.50

* Reuters Estimates Q$ share view C$0.36

* Backlog rises to 1.6 percent to C$1.25 billion

* Sees robust 2009, 2010 on infrastructure spending

* Shares up 1.7 percent at C$8.78 (Adds details, quotes, from conference call; adds share price)

By John McCrank

TORONTO, March 4 (Reuters) - Canada's biggest publicly traded construction and infrastructure developer, Aecon Group Inc (ARE.TO), said on Wednesday it expects 2009 to be a strong year as spending on infrastructure and building projects outweigh a slump in industrial demand in Alberta's oil sands.

The company, which reported its fourth quarter earnings after markets closed on Tuesday, ended 2008 with a record backlog of C$1.25 billion (C$977 million), up 1.6 percent over a year earlier.

Aecon also expects to see significant business in 2010 coming out of the Canadian government's C$40 billion two-year economic stimulus package announced at the end of January.

"I would expect that ... we'd start to see stimulus this fall, where we get traction, and that the larger impact of that would fall into 2010," said John Beck, Aecon's chief executive, in a call to analysts.

That said, 2009 is expected to be a difficult year for the industrial sector, which had driven much of Aecon's profitability over the past couple years, as a sharp drop in the price of oil has put a damper on development projects in the oil sands in Northern Alberta.

"The overheated market of just six months ago has gone cold," said Beck.

New projects in the oil sands reached a fever pitch when oil climbed to over $147 a barrel last summer, but with crude prices dropping by more than $100, many companies have deferred or canceled their plans in the region.

Scott Balfour, Aecon's president and chief financial officer, noted, however, there is a large amount of infrastructure in the oil sands that has been build that needs to be kept running and Aecon will get some of that work.

He said the company's recent acquisition of contractor Lockerbie & Hole Inc LH.TO for C$220 million in cash and shares, would help it win some of that business.

PROFIT BEATS ESTIMATES

Aecon reported a 9.3 percent drop in fourth-quarter profit on Tuesday, mainly because a favorable tax decision helped earnings the year before.

The Toronto-based company said it earned C$20.4 million, or 40 Canadian cents a share, compared with C$22.5 million, or 50 Canadian cents a share.

Aecon said that, in 2007, taxes that would normally have been recorded on income from its Canadian controlled entities were offset by the reversal of tax valuation allowances recorded in prior periods.

Analysts, on average, had expected a profit of 36 Canadian cents a share, before exceptions, according to Reuters Estimates.

Aecon said revenue in the quarter rose to C$258 million from C$207 million.

The company said its infrastructure backlog grew by 26.3 percent to C$470 million, mainly on road-building operations, while its buildings backlog grew by 11.3 percent, to C$534 million.

Its industrial backlog fell by 35 percent to C$250 million, with the largest decreases coming from its Western Canada operations and Ontario construction.

Aecon shares were up 1.7 percent, or 15 Canadian cents, at C$8.78 on the Toronto Stock Exchange at midday.

$1=$1.28 Canadian Editing by Rob Wilson

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below