March 9, 2010

SNC-Lavalin posts $359-million profit for 2009

MONTREAL

SNC-Lavalin Inc. is boosting its dividend on the basis that the construction and engineering giant’s plentiful cash and strong results in 2009 foretell even higher profits in 2010.

The quarterly dividend is increasing to 17 cents per share, 13 per cent more than its previous quarterly payout to shareholders.

Montreal-based SNC’s net income for 2009 was $359.4 million despite lower revenues. Revenues decreased to $6.1 billion from $7.1 billion while profits grew.

“Even in a sluggish economy, we increased our net income by 15 per cent, surpassing our long-term financial objective, and we increased our cash position and maintained a strong revenue backlog,’’ stated president and CEO Pierre Duhaime.

He said the company completed acquisitions that will expand its market share and propel its business strategy.

“With a strong revenue backlog and diverse prospects in Canada and outside Canada, we expect our 2010 net income to be as high or higher than 2009.”

The global engineering firm ended the year with fourth-quarter profits rising 31.7 per cent to $98.7 million. That compared to $61.3 million in the year-earlier quarter.

Revenues for the period ended Dec. 31 decreased 18.6 per cent to $1.58 billion.

The results significantly beat analysts’ profit expectations despite a deeper revenue decrease. Analysts polled by Thomson Reuters forecast $1.705 billion of revenue.

SNC-Lavalin said the higher earnings reflected improved contributions from power, chemicals and petroleum, and infrastructure concession investments, partially offset by weaker mining and metallurgy, and infrastructure and environment segments.

For the year, the company benefited from improved profitability in packages, partially offset by lower services gross margins.

It got a boost partially from the power segment, which suffered difficulties in 2008 because of problems with the Goreway energy project in Ontario.

SNC ended the year with $1.2 billion of cash, up from $988.2 million a year earlier. The increase mainly reflected cash generated from operations and proceeds from 10-year unsecured debentures of $350 million.

The backlog grew to $10.8 billion, from $9.6 billion a year earlier. Return on equity for the year was 27.3 per cent.

Analyst Neil Linsdell of Versant Partners said the dividend increase reflects nice results, significant cash and great return on equity.

“Definitely it’s a display of confidence in the next few years,” he said in an interview.

SNC-Lavalin is one of the leading engineering and construction groups in the world.

Founded in 1911, it has offices in more than 35 countries and has operations in some 100 countries.

Canadian Press

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