SNC-Lavalin lowers 2013 outlook
MONTREAL - Engineering giant SNC-Lavalin Inc. has sharply lowered its earnings forecast for fiscal 2013, citing among other things a number of money-losing legacy contracts and a $75-million charge related to a restructuring of its European operations.
Montreal-based SNC said it now expects consolidated net income in fiscal 2013 to be in the range of $10 million to $50 million, as compared with previous guidance in the range of $220 million to $235 million.
This revised outlook takes into account expected proceeds from the previously announced sale of 66 per cent of SNC's minority interest in the Astoria II power plant in New York.
Analysts on average had been expecting full-year net income of $226.83-million, according to Thomson Reuters.
"Certain legacy fixed price contracts entered into by the company between 2010 and 2012 and the ongoing softness in the mining sector unfortunately continue to stress our performance in 2013," president and CEO Robert Card said in announcing the adjusted guidance Tuesday night.
"Going forward, we will remain focused on winning and delivering high-margin projects and implementing measures to restore our SG&A (selling, general and administrative expenses) to historical levels, or better, with the aim of better positioning SNC-Lavalin for growth."
SNC-Lavalin (TSX:SNC) said it had recorded unfavourable cost "reforecasts" in the third quarter on certain unprofitable fixed price contracts in North Africa and in the hospital and road sectors.
However, the company says it believes the changes, which relate mostly to projects already in a loss position, are "one-time events not expected to further affect future profitability."
In addition, the company expects its outlook to be impacted by further softness in commodity markets.
SNC-Lavalin will announce its third-quarter results Nov. 1.