SNC shares plummet over Caisse chief ’s concerns

MONTREAL — Shares of SNC-Lavalin Inc. plummeted to the lowest level in nearly 15 years Tuesday in reaction to its largest shareholder, the Caisse de depot et placement du Quebec, warning that the embattled engineering firm had to move to emergency mode to improve its project execution.

The Montreal-based company’s shares fell to a low of $16.10 in early trading on the Toronto Stock Exchange and were down eight per cent at $16.38 around midday.

The TSX was closed Monday because of the Civic Holiday in Ontario and several other provinces.

Caisse CEO Michael Sabia shone the spotlight on SNC-Lavalin Monday during a discussion about the Quebec pension fund manager’s results for the first half of 2019. It posted a modest return of 6.1 per cent, well below that of 7.5 per cent of its reference portfolio. Nevertheless, its annualized return of 8.3 per cent over five years exceeds the 7.2 per cent return for the same reference.

The Caisse booked a $700-million loss from its SNC investment during the first six months of the year, and Sabia’s impatience was clearly evident.

Although Sabia has said a few times that the Caisse is and will remain “a long-term investor in SNC-Lavalin during this turbulent period,” he said that the engineering giant “must move quickly and must focus on execution.”

Unwilling to comment on the risk of a hostile takeover bid of SNC by foreign investors, Sabia acknowledged that the Caisse remains watchful and that SNC is important to Quebec and to Canada and “the engineering ecosystem in Canada.”

Paraphrasing famed inventor Thomas Edison, Sabia said: “A plan without execution is a hallucination.”

“That’s why we insist so much on the execution, on the daily discipline ... It is a change of culture, a higher level — significantly higher — of discipline.”