Oct. 16 (Bloomberg) -- SNC-Lavalin Group Inc., Canada’s largest engineering company, declined the most in two months after cutting its annual profit forecast for the second time amid costs related to projects in North Africa.
The shares fell 4.5 percent to C$42.13 at the close in Toronto, for their biggest daily decline since Aug 2.
The forecast reduction is a setback for the turnaround efforts of Chief Executive Officer Robert Card, who took over last year as the company grappled with a fraud investigation and investor lawsuits. SNC today cited its infrastructure and environment unit, specifically in the hospital and road sectors, as well as the projects in North Africa for the revised outlook.
“The shares are deeply discounted, the balance sheet is very, very solid in our view and we think that these problems and these issues will pass,” Yuri Lynk, an analyst at Canaccord Genuity in Montreal, said today in an interview. “There’s a whole new management team in there that is impressive. Patient investors will do well if they can handle the short term volatility.”
Lynk has a buy rating on the shares.
Net income for fiscal 2013 will be C$10 million ($9.7 million) to C$50 million, reduced from a previous range of C$220 million to C$235 million, the Montreal-based company said yesterday in a statement. SNC had previously cut its full-year forecast in August, also citing losses in North Africa and in its infrastructure and environment unit.
The company also said it will record a charge of about C$75 million this year related to a European reorganization.
The shares have gained 4.5 percent this year, compared with a 4.2 percent increase for the S&P/Toronto Stock Exchange Composite Index.
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