Pierre Duhaime, president and CEO of SNC Lavalin, in 2010.Jeff McIntosh/The Canadian Press
SNC-Lavalin Group Inc. reported a big drop in second-quarter net earnings Friday, citing a drop in its infrastructure and environment segment even as the results met analyst expectations on both profit and revenue.
The Quebec-based engineering giant said net earnings attributable to shareholders declined to $100.7-million or $0.66 per share, down from $119.1-million or $0.78 in the same 2010 period.
The company said the results mainly reflected lower contributions from its infrastructure and environment and infrastructure concession investments segments, partially offset by higher contributions from all other divisions.
Comprehensive revenues rose to $1.67-billion from $1.36-billion.
SNC was expected to earn $0.66 per share in profit in the quarter on $1.6-billion of revenues, according to analysts polled by Thomson Reuters.
Analysts had forecast that SNC-Lavalin would return to normal infrastructure and mining margins after enduring a weak result in the first quarter because of evacuation costs in Libya.
Previously announced mining and power contracts from BHP-Billiton and the Lower Churchill, along with large Canadian infrastructure projects were expected to boost the backlog.
Last quarter, SNC-Lavalin fulfilled its nuclear ambitions by agreeing to buy Atomic Energy of Canada's commercial services business from the federal government for $15-million.
Once the deal closes in October, the new owners want to target nuclear refurbishment work in Ontario and around the world and win some contracts to build new reactors.
President and CEO Pierre Duhaime said in a statement accompanying the earnings report that SNC looks forward to finalizing the acquisition.
"With our expertise and experience in the nuclear sector, we believe that Candu Energy Inc. will allow us to open new markets and capitalize on existing ones."
SNC-Lavalin also formed a joint venture with new Davie Yards buyer Upper Lakes Group and the South Korean firm Dae Woo to bid on $35-billion in federal shipbuilding contracts.
Two other short-listed companies – Irving Shipbuilding and Vancouver Shipyards – also submitted bids to build the next generation of warships and coast guard vessels.
The federal government wants to have its two shipyards picked by the fall.
Commenting on the year to date, Duhaime noted that revenues had increased, the company's cash position and revenue backlog remained strong and that "our list of prospects remains promising."
"We were awarded significant projects in the first half of the year and we continue to see many opportunities across all our sectors of expertise," Duhaime said.
"We continue to expect our 2011 net income to remain in line with 2010, when we exclude the gains from the disposals of certain assets and investments recognized in 2010," he added.
SNC has 24,000 employees in 100 countries, with offices in 35 countries. It is one of the biggest engineering and construction companies in the world and a major player in the ownership of infrastructure and in operations and maintenance services.
On the Toronto Stock Exchange, SNC shares were down $1.18 or 2.27 per cent at $50.89 in morning trading Friday.