Destroyed cars and buildings are seen in the besieged city of Misrata, Libya, April 28, 2011.Bernat Armangue/AP
The political upheaval in Libya is resulting in some fallout for SNC-Lavalin Group Inc. - which has major contracts in the country - but chief executive Pierre Duhaime says he's confident the company can manage successfully through the crisis.
"There are situations of political regime change. There have been many through SNC-Lavalin's 100 years," Mr. Duhaime said Thursday after the engineering and construction giant's annual meeting.
The company has vast experience dealing with upheaval in some of the dozens of countries where it operates and knows how to redeploy its resources and cut losses to minimize the damage, he said.
Montreal-based SNC-Lavalin posted first-quarter profit of $76.6-million or 49 cents per share, down from $86.7-million or 55 cents in the year-earlier period.
Revenue was $1.6-billion, up from $1.3-billion.
The result missed analysts' consensus estimate of 60 cents.
The company said the profit decline reflected reduced contributions from the mining and metallurgy unit as well as the infrastructure and environment division including projects in Libya.
Events in the North African country have forced the evacuation of SNC-Lavalin's employees and the suspension of all of its infrastructure projects there, including construction of a prison in Tripoli, a major irrigation system and an airport.
That, in turn, hurt first-quarter results, but senior executives did not provide details besides indicating that evacuation costs for personnel fell into the $5-million-to-$10-million range.
The total value of the projects in Libya is estimated at about $1-billion, said Mr. Duhaime.
In his speech to shareholders, Mr, Duhaime said the company remains committed to Libya and will return once the situation is back to normal and diplomatic relations have been restored.
He added that SNC-Lavalin is maintaining its previous forecast that profit for the year will be in line with that of last year.
In a research note, Desjardins Securities analyst Pierre Lacroix said that means the company will have to play "catch-up" in the remaining three quarters after posting disappointing results in its infrastructure and environment, and its mining and metallurgy, segments.
However, he views the first quarter as a "temporary blip in a rising trend."
Maxim Sytchev, analyst with NCP Northland Capital Partners, said in note he expects SNC-Lavalin to continue "to do well in its ability to replenish and source work world-wide.
"From our perspective, probability of SNC-Lavalin scoring a sizeable award outside of Canada is high given company's presence in a number of fast-growing geographies."
Mr. Duhaime said in his speech that revenue backlog at the end of March was $9.4-billion, up from $8.6-billion a year ago.
"Our revenue backlog and cash position remained strong. We were awarded significant projects during the first quarter, and we continue to see many opportunities across all our sectors of expertise," he said.
Bertrand Marotte