November 5, 2009 / 6:40 PM / 8 years ago

UPDATE 1-Stantec cuts quarterly loss on smaller charge

* Net loss of C$10 mln, down from C$30 mln year earlier

* C$35 mln goodwill impairment charge on U.S. West unit

* Net revenue climbs 6.1% to C$306.7 mln

* Shares fall 1.6 percent to C$26.56 on TSX (New throughout)

By Susan Taylor

OTTAWA, Nov 5 (Reuters) - Canadian engineering firm Stantec Inc (STN.TO) (STN.N) reported a sharply lower quarterly loss on Thursday, reflecting a smaller impairment charge, but net revenue lagged expectations as demand for the company’s industrial and urban land services weakened.

Those businesses were especially hard hit in the United States, which accounted for 42 percent of revenue in the quarter, but their decline was more than offset by growth in Stantec’s environment and transportation divisions.

Stantec, which wants to become one of the world’s top 10 engineering and architectural design firms, closed its biggest acquisition in January, with the C$143 million ($134.9 million) takeover of environmental consultancy Jacques Whitford.

Most recently, Stantec said it was buying Granary Associates, a U.S. healthcare-project management and design engineering firm with about 100 staff. The value of the late-October deal was not announced.

“They’re actually growing their revenues just because they’ve done some acquisitions,” said Genuity Capital Markets analyst Maxim Sytchev. “But on an organic basis, I think we’re going to have to wait two, three, maybe more quarters before we actually see a resumption of organic growth, so not before, I would say, mid-2010.”

Stantec said the outlook for its buildings, transportation and environment practices is stable for the remainder of 2009. The said the outlook for its industrial unit is stable with the chance of a moderate decline.

The company said it lost C$10 million, or 22 Canadian cents a share, in the quarter ended Sept. 30, compared with a loss of C$30 million, or 66 Canadian cents a share, in the same period last year.

Excluding the noncash goodwill impairment charges of C$35 million in the most recent quarter and C$53 million last year, earnings rose 8.7 percent to C$25 million, or 55 Canadian cents a share, from C$23 million, or 50 Canadian cents a share.

Gross revenue rose 10.5 percent to C$384.1 million, while net revenue, which excludes sub-consultant and other direct expenses, rose 6.1 percent to C$306.7 million.

Analysts, on average, had expected the company to earn 54 Canadian cents a share on net revenue of C$326.5 million, according to Thomson Reuters I/B/E/S.

Shares of Stantec fell 44 Canadian cents, or 1.6 percent, to C$26.56 on the Toronto Stock Exchange and dropped 28 cents to $24.94 on Nasdaq on Thursday.

Of the 16 analysts who cover the company, five rate the stock a ”strong buy’, seven have a “buy” rating, and four have a “hold” recommendation. ($1=$1.06 Canadian) (Reporting by Susan Taylor; editing by Peter Galloway)

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