More bad news
SNC-Lavalin warns 2018 profit will be even lower than it cautioned last month
MONTREAL — SNC-Lavalin Group Inc. has cut its guidance again due to problems at an unidentified mining project in Latin America as the beleaguered engineering giant contends with problems at home and abroad.
The Montreal-based company said Monday it has agreed to settle a dispute with its client for the mining project through an accelerated arbitration process.
But the hit to its mining and metallurgy business will be bigger than what it had said on Jan. 28 because arbitration won’t be completed in time to recognize the revenue in 2018 results, the company said.
SNC said adjusted diluted earnings per share from the division of its engineering and construction business for 2018 will now be in the range of 20 cents to 35 cents, down from an already reduced forecast of between $1.15 and $1.30 in January.
That translates into an expected fourth quarter loss of $350 million before taxes and interest for the mining and metallurgy segment, according to SNC.
The company said it expects “significant recoveries in the future.”
Shares dropped four per cent to $35.31 shortly after markets opened Monday, as the company’s
legal and diplomatic hurdles continue to loom large.
Last week, the Globe and Mail reported that Prime Minister Justin Trudeau’s office had put pressure on former attorney general Jody Wilson-Raybould to help SNC avoid a criminal prosecution following heavy lobbying from the company.
Trudeau has denied that the minister “was ever directed by me or anyone in my office to take a decision in this matter.”
Federal prosecutors announced in October they would not invite SNC to negotiate a remediation agreement over fraud and corruption charges that stemmed from alleged dealings with the Libyan regime under Moammar Gadhafi between 2001 and 2011.
Last month, SNC chief executive Neil Bruce said ongoing diplomatic tensions between Canada and Saudi Arabia was hurting business and forcing the company to consider a possible retreat from the oil-rich state.
The feud, as well problems with the mining project and an arbitration loss in Australia, prompted the company to cut its financial guidance which led to a drop in the company’s shares.