SNC-Lavalin Sees 2016 Profit Rising as Cost-Cutting Takes Effectby
SNC-Lavalin Group Inc. said profit will rise this year as a cost-cutting plan begins to pay off for Canada’s biggest engineering and construction company.
Adjusted earnings in engineering and construction will range from C$1.50 ($1.12) a share to C$1.70 this year, compared with C$1.34 in 2015, Montreal-based SNC said Thursday in a statement. That compares with the C$1.70 average of analyst estimates compiled by Bloomberg.
Chief Executive Officer Neil Bruce, promoted from the post of chief operating officer in October, is working to almost double pretax profit in the engineering and construction unit to 7 percent of revenue by 2017 -- in part by ensuring the company completes projects on time and avoids cost overruns that plagued SNC in recent years. In November, SNC said it plans to spend an additional C$50 million on a previously announced restructuring plan, with part of the amount to be recognized in the fourth quarter.
Bruce also must contend with the fallout from a scandal over improper payments that led the Royal Canadian Mounted Police to charge SNC last year with attempted bribery and fraud related to construction projects in Libya.
SNC reported adjusted fourth-quarter earnings for engineering and construction rose to 44 cents, matching analyst estimates.
SNC rose less than 1 percent to C$44.06 in Toronto on Wednesday. The stock has gained 7.1 percent this year, while Canada’s benchmark Standard & Poor’s/TSX Composite Index has been little changed.