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 $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
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); } //

Robert G. Card, president and chief executive officer of SNC-Lavalin gestures during a news conference after the annual general meeting in Montreal, May 8, 2014.

CHRISTINNE MUSCHI/Reuters

SNC-Lavalin Inc. posted strong first-quarter earnings on lower revenue and is revising upwards its 2014 guidance to reflect the sale of its stake in Alberta electricity transmission company AltaLink.

The Montreal-based engineering and construction firm said it booked net profit of $94.6-million or 62 cents per share in the first quarter, compared with $53.6-million or 35 cents in the year-earlier period.

Revenues were $1.7-billion compared with $1.9-billion.

Story continues below advertisement

Earnings per share of 62 cents handily beat analysts' consensus estimate of 46 cents.

The performance was helped by a higher contribution from the infrastructure unit on a reversal of a risk provision previously recorded on a Libyan project, a higher dividend from Toronto's Highway 407 toll road and higher net income from AltaLink.

Canada's largest engineering company is undergoing a major transformation under president and chief executive officer Robert Card after a series of corruption and bribery scandals at home and abroad, including allegations of unethical dealings in Libya and Algeria.

SNC-Lavalin said on Thursday it is revising its previously announced 2014 guidance, with EPS now expected to be in the range of $2.80 to $3.05, up from $2.25 to $2.50.

The revision results from an accounting requirement following the agreement to sell the equity stake in AltaLink that will see the company stop depreciating and amortizing non-current assets of AltaLink on a prospective basis.

The new outlook does not take into account the eventual gain on the sale of the AltaLink stake, SNC-Lavalin said.

The revised guidance, however, continues to be based on the expectation that challenges remain in the infrastructure and construction as well as oil and gas divisions, largely because of certain problematic legacy projects and a softer commodities market that has affected the mining and metallurgy segment, said the company.

Story continues below advertisement

Offsetting these challenges are expectations that the power and infrastructure concession investments – as well as the operation and maintenance – sub-segments should increase their contributions, the company said.

"Despite decreased revenus, we have a steady backlog, recent project wins and a solid prospect list, and we are on track to meet our guidance and remain positive about the year ahead," said Mr. Card.

The revenue backlog stands at $8.4-billion, with challenging legacy projects representing $728.8-million of that, a 19 per cent sequential decrease, said the company.

Dundee Capital Markets analyst Maxim Sytchev said in a research note that the cash position at the end of the quarter of $1.1-billion "remains very healthy.

"Despite the fears that working capital requirements to complete ongoing projects would materially impact the company's balance sheet, we are not seeing that," he said.

"In addition, the AltaLink monetization which was announced last week ... should add $2.9-billion (after tax) of cash onto the balance sheet by year-end, shoring up the company's finances significantly."

Story continues below advertisement

SNC-Lavalin has agreed to sell its position in AltaLink for $3.2-billion to Berkshire Hathaway Energy, controlled by legendary billionaire investor Warren Buffett.

Among other divestitures of the company's concession investments the company is looking at are its 16.7 per cent interest in Highway 407.

The goal is to boost the company's presence in oil and gas, infrastructure and power generation, and Mr. Card has previously stated that acquisition opportunities are being assessed.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
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

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: 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