SNC-Lavalin bounces back from corruption scandalby John Bambridge on Mar 11, 2016
SNC-Lavalin has released Q4 earnings showing a tripling in its adjusted profits to $0.33 per share compared with the $0.11 per share achieved in the same period in 2014.
After years of weathering successive corruption cases in multiple countries and all the associated legal costs, the company’s adjusted Q4 net income similarly rose to $49.2m, from $16.9m in 2014.
Moving forward, the Montreal-based construction firm said it anticipated earnings from the business to rise in 2016 to between $1.12 per share and $1.27 per share, from $0.99 per share in 2015.
By the end of 2015, SNC’s backlog stood at $8.94bn, and the company has started 2016 strongly, winning a $600m oil and gas project in Qatar, as well as a $1bn nuclear plant project in Ontario.
SNC is still facing charges of corruption and fraud relating to its prior dealings in Libya, but since the 2012 scandal it as benefited from strong cost-cutting efforts and a reliable stream of work in Canada.
In November 2012, SNC’s former CEO, Pierre Duhaime, was arrested and charged with fraud after a series of internal and external investigations into the company over $56m in illegal payments that saw the shares fall by nearly 30% in just twelve months.
However, in 2013, a SNC-Lavalin-led consortium was awarded the contract to build a $1.79bn light rail transit system in Ottawa, as well as a $890m underground rapid transit project in Vancouver.
SNC subsequently signed a $500m contract with Saudi Arabia’s Ma’aden in 2014 for a 15,000m3 daily capacity sulphuric acid plant, and established a regional office for the Middle East in Abu Dhabi.
The next year, the Canadian contractor announced that it has picked up two contracts in the Middle East worth a combined $500m after acquired oil and gas specialist Kentz in a $2.1bn deal.
Maxim Sytchev, a business analyst at Canada’s Financial Post, expects SNC stock to rally this year.
He said, “A lot of investors have been avoiding this name for a number of years, but it’s becoming a very different story, and these are powerful attributes to explain further momentum in the stock.”
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