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Canadian engineering giant SNC-Lavalin Group Inc. is pulling its financial guidance for the year and speeding up efforts to slash costs as the novel coronavirus pandemic slams companies around the world.

The financial outlook for 2020 provided roughly one month ago will be withdrawn, SNC-Lavalin said in a statement Friday. The company is also cutting expenses, including freezing capital spending and significantly reducing discretionary spending that is not needed to directly support client delivery.

SNC-Lavalin continues to operate and serve clients as most of its engineering services staff have been able to continue working remotely from non-office locations, the company said. But it described the situation as rapidly evolving.

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Work on several of SNC-Lavalin’s big infrastructure projects in Canada has been suspended under orders by the governments of Quebec and Ontario that all non-essential businesses must close for at least two weeks unless their staff is able to work remotely. For example, construction has stopped on Montreal’s new Réseau express métropolitain light rail system.

Employees not able to carry on productive work, either due to temporary shutdowns or the nature of their job, will be furloughed or see their hours reduced, SNC said Friday. The company gave no details about the number of employees impacted by the measure.

SNC-Lavalin’s senior executives will take a 20 per cent salary cut and board members will take a 20 per cent reduction in cash compensation for the second quarter, the firm said. “The company stands ready to take additional cost action through the second quarter and beyond should the situation demand,” it said.

A one-month work stoppage would reduce SNC-Lavalin’s revenue by about 8 per cent and its earnings by about 35 per cent for the second quarter, National Bank of Canada analyst Maxim Sytchev estimated in a March 23 report.

At the end of the fourth quarter of 2019, SNC-Lavalin had cash available of $1.2 billion and a $2.6 billion revolving credit facility. The net recourse debt to EBITDA ratio required in the credit facility covenant was 2.1 times.


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