Shares in Canadian infrastructure giant and Evergreen Line builder SNC-Lavalin Group Inc. (TSX:SNC) sank to a 29-month low March 5 after the scandal-plagued company released flat earnings and an outlook that disappointed analysts.
The Montreal-based company known locally for building projects such as Vancouver’s Canada Line and Kelowna’s William R. Bennett Bridge said that its core engineering and construction business is aiming to generate between $1.30 and $1.60 in earnings per share in 2015. That’s far below the $2.22 consensus forecast.
“This was a year of significant change at SNC-Lavalin,” the company’s CEO, Robert Card, said in a statement.
“We took action to focus the company and expand our engineering and construction platform through deeper oil and gas capabilities which, along with our power segment, are expected to continue to drive engineering and construction net income improvements in 2015.”
Adjusted profit rang in at $106.67 million in the fourth quarter of 2014. That is slightly up from the $106.07 million earned in the same quarter a year earlier.
Revenue for the quarter was a higher-than-expected $2.82 billion, up from $2.12 billion a year earlier.
What plagues SNC Lavalin, however, is the threat of potential fines that run up into the hundreds of millions of dollars in penalties thanks to foreign bribery allegations.
On February 19, the RCMP charged SNC with fraud and corruption in connection with its operations in Libya.
The company has denied all charges and vows on the splash page of its website to “vigorously defend ourselves and plead not guilty in the interest of our current employees, families, partners, clients, investors and other stakeholders.”
Adding to its troubles is that SNC-Lavalin’s former executive vice-president of construction, Riadh BenAissa, was convicted in Switzerland in October of arranging approximately $130 million in illegal payments and bribery to help the company win billions of dollars’ worth of construction megaprojects in Libya.
SNC has also been engaged in a campaign to cut costs.
It announced in November that it plans to slash 4,000 jobs worldwide, including 1,000 jobs in Canada. That is about 8.8% of its 45,000 employee global workforce.
Other SNC projects in B.C. include the John Hart Generating Station in Campbell River and a BC Hydro project to modernize the Horsey Substation in Victoria.
SNC shares are now down 38% to $36.97, compared with their 52-week high of $59.63.
The last time SNC shares traded at a lower price was in September 2012.
