SNC Lavalin reports increased profits for fourth quarter
Yet, company’s $94.6 million in net income falls short of analyst expectations
Montreal – SNC-Lavalin reported an increase in its fourth-quarter profits compared with a year ago as it navigated accusations of fraud against its former chief executive. The company said Friday it earned $94.6 million or 63 cents per share in the fourth quarter with $2.42 billion in revenue, as its investment in Ontario’s Highway 407 paid higher dividends. That was up from a profit of $76.13 million or 50 cents per share in the fourth quarter of 2011 when SNC’s revenue was $2.12 billion.
“The last months have been dedicated to putting the house in order and reinforcing our commitment to excellence, quality, safety and ethics,” SNC chief executive and president Robert Card said in a statement. “As previously announced, we continue to actively review and develop the strategic business plan of the company, and we expect to announce the main elements of the plan at the time of our first quarter financial results and annual general meeting.”
Former CEO Pierre Duhaime and another former SNC top executive, Riadh Ben Aissa, are facing fraud charges stemming from a contract involving the building of the multibillion-dollar McGill University Health Centre in Montreal. Duhaime was relieved of his duties in March 2012 after an independent review showed he signed off on $56 million in payments to undisclosed agents. The company called his abrupt departure a “retirement.” Duhaime was arrested last November, during the quarter covered by the latest financial report, by Quebec’s anti-corruption squad.
Despite the increase in earnings, the results fell short of analysts expectations which were for a profit of 92 cents per share of net income with $2.17 billion of revenue, according to figures compiled by Thomson Reuters.
Driving SNC’s improvement for the quarter was its investments in infrastructure and concessions, including higher dividends from Highway 407 and improved profits from AltaLink, offset in part by lower earnings from Shariket Kahraba Hadjret En Nouss S.p.A., a power plant in Algeria.
The division earned $70.4 million in the latest quarter, a 78 per cent increase from $39.5 million in the fourth quarter of 2011. SNC’s profit excluding the infrastructure and concession investments fell to $24.25 million from $36.5 million a year earlier. In its outlook, the company said it expects this year’s net income will be between 10 per cent and 15 per cent higher than 2012.
The company also said that a review of its financial reporting has found that problems in the system identified last year have been eliminated. A former executive of German industrial conglomerate Siemens was hired recently to be SNC’s chief compliance officer, responsible for guiding the company on ethics and matters of corporate governance.