SNC Lavalin 2014 Forecast Misses Estimates on Roads SlumpFrederic Tomesco and J. Kyle O’Donnell
SNC-Lavalin Group Inc., Canada’s largest engineering company, reported a drop in fourth-quarter profit and said earnings would be less than analysts were estimating in 2014 due to a slump in commodity markets and unprofitable road projects.
SNC, based in Montreal, forecast net income this year will be between C$2.25 and C$2.50 a share, lower than the average estimate of C$2.67. The company said the outlook is “reflecting continued challenges in the infrastructure and environment, and oil and gas segments” as well as lower prices affecting its mining and metallurgy unit.
Shares fell 4.1 percent to C$46.39 at the close in Toronto, the biggest decline since October. The stock has fallen 2.9 percent this year, as Canada’s benchmark Standard & Poor’s/TSX Composite Index advanced 4.8 percent.
“While challenging legacy projects continue to negatively impact the company’s earnings in 2014, we continue to drive toward returning gross margin to revenue ratios to the stated goals,” Chief Executive Officer Robert Card said in a statement. Card twice cut SNC’s 2013 profit forecast last year, blaming cost “reforecasts” in the infrastructure and environment unit.
SNC also announced a dividend of 24 cents a share, up from 23 cents previously and lower than estimates of 25 cents. It is payable on April 3 to shareholders of record on March 20.
Net income excluding non-controlling interests fell 1.4 percent in the three months ending Dec. 31 to C$92.6 million ($84.4 million), or 61 cents a share, from C$94 million, or 62 cents, a year earlier, the company said today in the statement. The average of predictions compiled by Bloomberg was 64 cents.
SNC had costs of C$55 million in the quarter related to a European reorganization. Fourth-quarter sales fell 12 percent to C$2.1 billion, SNC said. That matched the average estimate.