SNC-Lavalin Group shares fall due to shortfall despite transition to third quarter earnings

MONTREAL – The actions of the SNC-Lavalin Group inc. fell after the engineering firm missed expectations despite a third-quarter profit, boosted by the sale of its oil and gas business.

Shares of the Montreal firm fell $ 2.77 or 7.8 percent to $ 32.77 at noon Friday on the Toronto Stock Exchange.

SNC said its net income attributable to shareholders was $ 600.7 million, compared with a loss of $ 85.1 million in the same quarter last year.

This year’s quarter results included a gain of $ 577.8 million on the sale of the company’s oil and gas operations.

SNC-Lavalin said its profit from continuing operations attributable to shareholders was $ 18.6 million or 11 cents per diluted share for the quarter ended September 30, compared to a loss of $ 8.8 million or five cents per diluted share a year ago.

Managing Director Ian Edwards said the core engineering services business performed well in the first three quarters of the year, positioning it to meet its financial outlook for the full year.

“At the same time, we continue to make progress in the liquidation of our remaining LSTK (Lump Sum Turnkey) contracts and have reduced the LSTK construction contract backlog by more than 65% over the past two years.” , he said in a statement.

“Our financial performance to date in 2021 supports our progress and positions us to execute our ‘Pivotal Growth Strategy’.

Revenue totaled $ 1.81 billion, up from $ 1.78 billion in the same quarter last year.

SNC said its adjusted profit from professional services and project management was 23 cents per diluted share for the quarter, down from a loss of one penny per diluted share a year ago.

SNC was scheduled to report 39 cents per share in adjusted earnings on $ 1.8 billion in revenue, according to financial data firm Refinitiv.

The shortfall was caused by higher costs for legacy projects and business costs, said analyst Benoit Poirier of Desjardins Capital Markets. However, he noted that its operating cash flow exceeded expectations for an eighth consecutive quarter.

“At the end of the day, we are disappointed with the reported failure as the core business of engineering services has performed very well again,” he wrote in a report.

But RBC Dominion Securities analyst Sabahat Khan said progress in the engineering services industry is encouraging.

“In our opinion, investors should focus on advancing in the business areas included in engineering services, as this platform will drive business once the three remaining LRT projects are completed. “

Meanwhile, the company noted that the consortium that SNC was a part of that built the Champlain Bridge in Montreal is suing the Canadian government for $ 380 million in damages.

This report by The Canadian Press was first published on October 29, 2021.

Companies in this story: (TSX: SNC)

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