February 24, 2011 / 3:24 PM / 7 years ago

UPDATE 2-Stantec sees internal sales growth in 2011

* Organic sales seen growing 2-3 pct in 2011

* Q4 EPS C$0.55 vs C$0.50 a year earlier

* Revenue nearly 12 pct higher at C$383.7 million

OTTAWA, Feb 24 (Reuters) - Engineering firm Stantec Inc (STN.TO) (STN.N) posted a bigger than expected quarterly profit on Thursday thanks to lower taxes and forecast organic revenue growth of 2-3 percent in the year ahead.

Closely watched by analysts for organic, or internal, growth, the acquisition-hungry Canadian company also reported organic revenue gains in its fourth quarter.

“Investors should be focusing on the fact that the company, for the first time since Q3 2008, was able to register positive organic growth,” said NCP Northland Capital Partners analyst Maxim Sytchev.

“Organic growth is what drives value creation on the existing asset base for the company. It’s not just the acquisitions that the company is making — last year they did 10. You have to grow the base in order to have stronger returns on equity and assets.”

In the fourth quarter, ended Dec. 31, C$13.5 million of revenue gains came from organic growth, while C$33.2 million came from acquisitions.

For full-year 2011, Stantec targets 2-3 percent organic revenue growth over 2010, with a stable outlook for its buildings and urban land practices, a stable to moderate view for its transportation and environment units and expectation of moderate organic growth in its industrial practice.

“In 2011, we expect the overall outlook for professional services in our key markets and practice areas in North America to remain stable as the economy improves and we continue to build a top-tier position in the United States,” Stantec said in a statement.

“Our overall outlook for our international operations is also stable.”

Quarterly results were largely in line with analyst estimates, Sytchev said.

The Edmonton, Alberta-based company said earnings rose to C$25.1 million ($25.6 million), or 55 Canadian cents a share, from a profit of C$22.9 million, or 50 Canadian cents a share, in the year-earlier period.

Analysts, on average, had expected a profit of 51 Canadian cents a share and revenue of C$309 million, according to Thomson Reuters I/B/E/S.

Revenue rose 11.9 percent to C$383.7 million.

Stantec shares were down 27 Canadian cents at C$27.93 on the Toronto Stock Exchange on Thursday afternoon.

$1=$0.98 Canadian Reporting by Susan Taylor; editing by Peter Galloway

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