SNC-Lavalin on the upsurge
SNC-Lavalin reported very positive results in its second quarter, with net income increasing to $88.5 million compared to only $26.5 million for the same quarter last year. It meant income of $0.59 per diluted share, compared to $0.17 per diluted share last year. The company declared a cash dividend of $0.26 per share, payable on September 1.
Neil Bruce, president and chief executive officer, said “We are pleased with our results in the second quarter as we continue to drive consistency throughout our organization. … Looking ahead, we see many opportunities across all our sectors, particularly in infrastructure, power and oil and gas.” He said they were seeing sustained earnings improvements across the company.
Adjusted net income from engineering and construction for the period was $71.4 million, or $0.48 per diluted share, compared to $8.2 million, or $0.05 per diluted share, in 2015. The increase, said the company, was mainly due to improvements in the infrastructure sector.
General and administrative costs had decreased by 10% in the quarter, following an 19% reduction in the first quarter. The statement said that the reductions are mainly due to the “STEP Change” program which it will continue to pursue this year.
(CTV news reported that the Montreal company has cut approximately 950 employees as part of its cost-cutting measures.)
Bruce said they expect the oil and gas and power segments will continue to be the main income-generators, while mining and metallurgy will likely be the smallest contributor to net income. He said, “We also expect that the infrastructure and construction sub-segment will return to full year profitability in 2016.
The company’s revenue backlog totaled $12.5 billion at the end of June 2016. The backlog for infrastructure and construction was $3.374 billion, the company’s second largest sector. Oil and gas was $4.018 billion; power was $2.829 billion, and operations and maintenance was $2.020 billion. Mining and metallurgy’s backlog was just $303 million.
In June, an article in the Globe and Mail entitled “SNC-Lavalin is crushing the returns of the TSX and many see more upside,” noted that the company’s shares had climbed 25% this year.
To read the full financial results, click here.
To read an August 3 report by CTV News, click here.
To read the June 14, 2016 article in the Globe and Mail by Frederic Tomesco, Bloomberg News, click here.