Shares of construction firm Aecon Group Inc. were down nearly 10 per cent at midday Friday after the company said it expected to book "significant losses" due to unspecified changes in a Suncor Energy oil sands project.
The company's stock backed down $1.02 to $8.84 on the Toronto Stock Exchange. Earlier in the day prices had dropped nearly 12 per cent.
Aecon, one of Canada's largest publicly traded construction companies, issued a statement saying that it predicts an operating loss of between $56-million and $59-million from Suncor's Fort McMurray, Alta., Firebag 3 plant project.
While the amount of the operating loss hasn't been finalized, Aecon said the impact will be limited to 2010 fiscal results because it turned over the Firebag project to Suncor at the end of the year. Suncor is Canada's largest oil sands producer and had originally put Firebag 3 on hold in late 2008 during the recession. The company revived the project a year later.
Aecon said it assisted Suncor with transitioning from construction to pre-commissioning mode but did not provide details on what changes were made to the project or why. Calls to Aecon and Suncor were not immediately returned.
"Notwithstanding the unsatisfactory financial results achieved on the project, we continue to have a solid working relationship with Suncor and continue to work on a number of Suncor sites," John Beck, Aecon's chairman and CEO said in a statement.
"We remain as committed and optimistic as ever for Aecon's ongoing success in the oil sands."
The Toronto-based construction firm said it expects its fourth- quarter results to be on track with expectations, aside from the changed Suncor order and the $30-million to $35-million sale of Aecon's interest in the Cross Israel Highway concession.
Aecon is a giant in the construction industry, having recently received a $279-million contract to extend one of Toronto's subway lines and a $25-million contract from Bird Construction Co. to upgrade and expand a water treatment plant in Fort McMurray.
In the third quarter, Aecon posted a big decline in its profit to $17.2-million from with $29.7-million a year earlier. Revenue was $800-million for the three months, compared with $707-million a year earlier.
Last month, Aecon announced that president Scott Balfour was leaving the company to pursue other opportunities. During Mr. Balfour's tenure, the company's revenue more than doubled.
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