Engineering giant expects stronger profits ahead

MONTREAL — SNC-Lavalin is projecting higher profits from most of its operations and new contract wins this year despite a soft end to 2016.

The Montreal-based company anticipates that performances from all segments, aside from mining, will drive a 13 to 32 per cent improvement in adjusted earnings from its core engineering and construction operations.

Still, the $1.70 to $2 per share earnings guidance for the year missed analyst forecasts of $2.28 per share.

SNC-Lavalin said it expects to benefit from higher infrastructure spending in North America, global nuclear opportunities and higher oil and gas activities in the Middle East and the U.S. However, it forecasts earnings from mining and metallurgy will remain flat because of softer commodity prices.

Its investment in Highway 407, a toll highway near Toronto, is also expected to generate higher returns, the company said.

“We expect 2017 to be another good year for SNC-Lavalin,” said CEO Neil Bruce. He said the company is focused on infrastructure opportunities particularly in Canada and expects to at least double the number of winning bids, mainly outside Canada, by the end of the first quarter in its small mining segment.

SNC also said it expects to move forward this year with efforts to unlock value from its North American concessions by transferring assets excluding Highway 407 to a fund and selling part of it to private investors.

While reporting its fourthquarter earnings, SNC-Lavalin also provided a brief update on the status of its corruption and fraud case, saying a preliminary inquiry scheduled to begin in September 2018 may be expedited to late 2017. SNC-Lavalin, its construction division and its international subsidiary have pleaded not guilty to one count each of fraud and corruption.

The RCMP alleges SNCLavalin paid nearly $47.7 million to public officials in Libya between 2001 and 2011 to influence government decisions. The Mounties also accuse the company of allegedly defrauding various Libyan organizations of about $129.8 million.

SNC-Lavalin said it has recovered $15.2 million as of year-end from former vice-president Riadh Ben Aissa, who pleaded guilty in 2014 in Switzerland to bribery, corruption and money laundering. Aissa was ordered to repay the company $17.2 million plus interest. He also faces fraud charges in Canada in relation to a large Montreal hospital contract.