By The Canadian Press
Fri., Oct. 29, 2021timer2 min. read
updateArticle was updated 10 hrs ago
MONTREAL – SNC-Lavalin Group Inc. shares fell after the engineering firm missed expectations despite swinging to a profit in its third quarter, boosted by the sale of its oil and gas business.
The Montreal-based firm’s shares lost $2.25 or 6.3 per cent to $33.29 in trading Friday on the Toronto Stock Exchange.
SNC said its net income attributable to shareholders totalled $600.7 million, compared with a loss of $85.1 million in the same quarter last year.
The results in the quarter this year included a gain of $577.8 million on the sale of the company’s oil and gas business.
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 Sept. 30, compared with a loss of $8.8 million or five cents per diluted share a year ago.
Chief executive Ian Edwards said core engineering services operations performed well through the first three quarters of the year, positioning it to achieve its full-year financial outlook.
“At the same time, we continue to progress winding down our remaining LSTK (lump-sum turnkey) contracts and have reduced the LSTK construction contracts backlog more than 65 per cent over the last two years,” he said in a statement.
“Our financial performance thus far in 2021 supports the progress we are making and positions us to execute on our “pivoting to growth strategy.”
Revenue totalled $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 amounted to 23 cents per diluted share for the quarter, compared with a loss of a penny per diluted share a year ago.
SNC was expected to report 39 cents per share in adjusted profits on $1.8 billion of revenues, according to financial data firm Refinitiv.
The earnings miss was driven by higher costs for legacy projects and corporate costs, said analyst Benoit Poirier of Desjardins Capital Markets. However, he noted its cash flow from operations beat forecasts for an eighth consecutive quarter.
“Bottom line, we are disappointed by the reported miss as the core engineering services business once again performed very well,” he wrote in a report.
But analyst Sabahat Khan of RBC Dominion Securities said progress in the engineering services business is encouraging.
“In our view, investor focus should be on the progress across the business lines included within engineering services as that platform will drive the business once the remaining three LRT projects are completed.”
Meanwhile, the company noted that the consortium that SNC was 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 Oct. 29, 2021.
Companies in this story: (TSX:SNC)