An exterior view of the offices of Genivar Inc., one of Quebec's top engineering firms, seen in Montreal, February 11, 2013.Christinne Muschi/The Globe and Mail
Genivar has unveiled a strategic plan to more than double its size even as the big consulting engineering firm acknowledged that ethical lapses have undermined employee morale.
"Unfortunately, we can't change the past, but we can learn and come out of it stronger," CEO Pierre Shoiry told shareholders Thursday at the company's annual meeting.
He urged employees, particularly the 2,200 workers in Quebec, to "keep their heads high."
Shoiry conceded that employee morale had been hurt by testimony at a corruption inquiry, including by a former senior executive, about $500,000 in illegal donations to local political parties.
He said it was only natural that such issues are a big topic of discussion, especially in Quebec.
But he said the company is adopting new measures to ensure employees around the world follow ethical standards.
It has appointed a chief risk and ethics officer who will oversee implementation of policies regarding gifts, relations with third parties and employee education.
"Yes, there were some misdealings, and there was some things that are not acceptable today that maybe were acceptable 20 years ago, but (employees) have to continue their work," he told reporters.
Shoiry also said the industry has to act to ensure it remains attractive to new graduates.
The chief executive declined to say whether the company supports political efforts that would require companies to reimburse taxpayers for improper actions.
Genivar has applied for approval from Quebec's securities regulator to bid on projects in the province. While it has no indication that it will be turned down, being barred is a serious risk for any company, Shoiry said.
"We are in a professional service business. We sell trust to our clients – that's what we do. So, being barred from any client is not good news."
As it looks to turn the page on the scandal, Genivar is hoping to more than double its revenues from $1-billion last year to $2.3-billion by the end of 2015, through both growth and acquisitions.
Genivar expects $500-million of the increase in revenue will come from acquisitions. Genivar's net revenues topped $1-billion in 2012 thanks to its $442-million takeover last year of WSP, a large U.K.-based consulting engineering firm.
While it will look at "tuck-in" acquisitions in top markets in Canada, Britain and Sweden, Genivar's main focus will be in areas where it has a "sub-scale" presence.
Those include Australia, Germany, Finland, Norway, South America and the United States, where it is the 60th largest engineering consulting firm with 1,000 employees.
It will also seek to expand revenues with large global customers that do business in more than three countries.
Genivar is also looking to increase the number of employees by one-third to 20,000.
Shoiry said the company is not seeking to get into the infrastructure concessions business or expand into new sectors.
"We're pure-play consultants. We're a fee-for-service business. That's what we want to focus on," he said, acknowledging it's a less risky form of operation.
"In our business, you never hit home runs, but you never strike out. It's a good, steady business."
Earlier, Genivar shareholders elected the engineering company's first female director. Birgit Norgaard of Denmark was elected one of seven directors.
The company also received shareholder support to change its name to WSP Global Inc., effective Jan. 1, 2014.
Executives said the move was a pragmatic way to align its Canadian operations with the 34 other countries in which it now operates and had nothing to do with bribery allegations linked to the Genivar name.
Meanwhile, analysts welcomed Genivar's acquisition strategy.
Maxim Sytchev of Dundee Capital Markets said investors should like the "realistic" growth strategy.
"Going into the annual general meeting, the market was worried that Genivar will announce something very lofty," he wrote in a report, upgrading the stock to buy.
He pointed specifically to the northeastern U.S. and Texas as areas where Genivar might want to expand, perhaps using a public-private partnership model.
Genivar has $199-million in available credit and $84-million in cash.
Pierre Lacroix of Desjardins Capital Markets said he is also encouraged by the strategic plan.
"We believe that Genivar's expected earnings growth is consistent with our current valuation of the shares and should also lend support to the company's dividend," he wrote.
On the Toronto Stock Exchange, Genivar's shares gained 32 cents at $24.91 in Thursday afternoon trading.