August 13, 2009 / 8:27 PM / 8 years ago

UPDATE 1-Churchill sales and profit drop, backlog swells

* Profit falls 10 percent, sales 32 percent

* Backlog grows 9 percent to C$1.34 billion

* Outlook positive, prospects strong, CEO says

* Shares ease 1 percent to C$11.63

OTTAWA, Aug 13 (Reuters) - Canada’s Churchill Corp CUQ.TO reported a 10 percent drop in quarterly profit on Thursday as the construction company’s revenue tumbled 32 percent on delayed projects and declining industrial work.

But the company said better times are ahead, pointing to a 9 percent increase in its order backlog.

Chief Executive Jim Houck said the prospect of renewed oil sands activity in late 2009 and into 2010 was encouraging and that “prospects are strong” for new infrastructure and industrial projects.

Maxim Sytchev, an analyst at Genuity Capital Markets, said the quarterly results are in line with others in the sector.

“The revenue miss that we have seen from various other infrastructure companies ... looks like it’s a theme for this reporting season,” he said in an interview. Financing and permit delays are slowing the pace of projects and hitting revenue, he said.

“What we have to focus on really this particular quarter is that we again witnessed a year-over-year increase in both backlog and work in hand,” Sytchev said.

Work in hand refers to projects in the next 12 months, with backlog covering longer periods. Total backlog at June 30 rose to C$1.34 billion from C$1.23 billion at the end of the year-before quarter.

Churchill said that quarterly earnings from continuing operations fell to C$8 million, or 45 Canadian cents a share, from C$8.9 million, or 50 Canadian cents per share, in the same period last year.

Revenue declined to C$136.7 million from C$202 million.

Analysts, on average, expected earnings per share of 40 Canadian cents and revenue of C$186 million, according to Reuters Estimates.

Macquarie Research analyst Avi Dalfen said the results were better than expected, as adjusted earnings per share of 44 Canadian cents beat his estimate of 42 Canadian cents.

Churchill also announced the sale of its poorly performing Triton industrial fabrication business on Wednesday, saying it demonstrates its desire to focus on profitable operations.

Churchill will get C$20 million cash from selling the business. A restructuring and office consolidation is also seen saving C$2 million annually.

The company’s shares lost 12 Canadian cents, or 1 percent, to end at C$11.63 on the Toronto Stock Exchange on Thursday. The stock has lost about 26 percent of its value over the last 12 months. ($1=$1.09 Canadian) (Reporting by Susan Taylor; editing by Peter Galloway)

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