Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

SNC-Lavalin Group Inc. is forecasting a small uptick in sales for the coming year as it tries to recast its future as a more resilient engineering company since striking a plea deal with federal prosecutors in December.

The Montreal-based company said on Friday it expects gross revenue from its main engineering services businesses not including capital assets to grow by a low single-digit percentage in 2020. Earnings before interest taxes, depreciation and amortization as a percentage of gross revenue should be between 10 per cent and 12 per cent for those businesses, SNC said.

SNC shares surged 10.95 per cent on the Toronto Stock Exchange, closing at $31.20.

Story continues below advertisement

“We’ve got to a point where now we’ve defined what the future of [SNC] is,” chief executive Ian Edwards said in a conference call on Friday, adding that a new strategic direction is in place and legal matters resolved. “It’s really about execution now.”

Under the deal with prosecutors unveiled in December, SNC’s construction division pleaded guilty to a single charge of fraud related to past activities in Libya. It will pay a $280-million fine and was ordered to hire an independent consulting firm to monitor and report on its compliance and ethics programs for three years. A more potentially damaging charge of bribery under the Corruption of Foreign Public Officials Act was dropped.

On Friday, SNC reported a fourth-quarter loss of $293-million, or $1.67 a share, on revenue of $2.4-billion as the company made an accounting provision for the criminal penalty. During the same quarter last year, SNC tallied a loss of $1.6-billion, or $9.11 a share.

With the legal issues resolved and a new operational strategy adopted, SNC has dissolved a special board committee set up in December, 2018, that examined the company’s options in the face of adversity. Now, it is up to Mr. Edwards and his team to carry out a plan to reshape SNC after setbacks that hit its finances and shredded its market capitalization last year.

The biggest change is that SNC will get out of fixed-price construction work, or what it calls lump-sum turnkey contracts, to focus on more fee-for-service consulting and nuclear work, which have less risk and higher profit margins. The company is completing its lump-sum infrastructure and resource projects now worth $3-billion, and said it will not bid on such ventures in the future, including light rail lines in Toronto and Montreal.

SNC-Lavalin is also weighing the alternatives for its resources business, which could include selling all or parts of it. The company is shutting down its Valerus oil and gas production and processing facilities in Houston and took a $72-million charge for that in its latest quarter.

“The most important thing we’re trying to get to is [that the resource business] has to be approaching the same level of profitability as the rest of our [continuing] engineering services business,” said Sylvain Girard, SNC’s outgoing chief financial officer.

Story continues below advertisement

Achieving consistent profitability is key for SNC as it tries to build momentum. By several measures, its financial situation is improving.

Operating cash flow came in at $312-million for the three months ended Dec. 31, the highest quarterly sum since the fourth quarter of 2017. The company managed to reduce its leverage, and now has a debt-to-earnings ratio of 2.1 times. Adjusted earnings a share of $0.45 on SNC’s core business was also higher than the $0.42 analysts had expected.

“[The company’s situation] is becoming a little bit more predictable, and that’s good,” AltaCorp Capital Inc. analyst Chris Murray said in an interview. “Most of the major issues where you would question the long-term viability of the company, I think they’re past those."

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies