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); }
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you make the most of staying home.
Visit the hub

SNC-Lavalin Group Inc. is restructuring its money-losing resources business with a plan to sell off or shut down the nonprofitable parts and fold the remnants into its engineering services division.

The announcement Friday came alongside earnings that fell short of analysts’ expectations as the engineering giant lost $111.6 million in the second quarter – compared to $2.12 billion a year earlier.

“The legacy resources projects business and associated lump-sum turnkey projects will be largely wound down and the projects complete by the end of 2020,” SNC-Lavalin said in a release Friday.

Story continues below advertisement

The company forecasts the business will be profitable next year.

The move, which wraps up a strategic review launched by CEO Ian Edwards when he took the helm in June 2019, narrows SNC’s focus on resources to the Americas and the Middle East, where the company said it has “profitable relationships with long-standing customers” in energy and mining.

The turn away from resources will reduce that segment’s operations to nine countries from 30 and cut its head count to 8,000 from 15,000 by the end of the year, with 2,000 more departures expected by 2021, SNC said.

The resources division continued to drag on profitability last quarter. Its so-called lump-sum turnkey projects – fixed-price contracts under which companies have to eat any cost overruns – accounted for 78 per cent of the company’s $122 million in adjusted losses before interest and taxes.

Edwards pledged a year ago to retreat from fixed-price projects, with one resources contract completed last quarter and the vast majority of work on the four remaining ones on track for completion by the end of 2020 – “a key milestone in terms of de-risking the business,” Desjardins Securities analyst Benoit Poirier said in a research note.

“Bottom line, while we acknowledge that SNC’s (second-quarter) results were below expectations, we note that the miss was related to lump-sum turnkey projects which management is in the progress of exiting,” Poirier said.

SNC announced the restructure as it reported a net loss of 64 cents per diluted share for the three months ended June 30, compared with a loss of $12.07 per share a year earlier. The quarterly loss includes $47.3 million of restructuring costs mainly related to the resources services transformation.

Story continues below advertisement

The adjusted loss improved to $31.6 million or 18 cents per share, versus a loss of $234.2 million or $1.34 per share in the second quarter of 2019.

Revenues decreased 14.5 per cent to $1.95 billion from $2.28 billion in the prior year.

The company was expected to report six cents per share in adjusted profits on $2 billion of revenues, according to financial markets data firm Refinitiv.

“SNC’s challenges have escalated on the back of COVID-19,” said Laurentian Bank Securities analyst Mona Nazir in a research note.

Edwards cited the economic downturn prompted by the pandemic – which halted construction and resources projects around the globe – as well as a downturn in oil prices as evidence that its pivot toward core engineering services was the right move.

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
Tickers mentioned in this story
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