SNC-Lavalin Drops Most in More Than a Year as Profit Target Cut
By Frederic Tomesco, Bloomberg News
SNC-Lavalin Group Inc. fell the most in almost 14 months after the engineering and construction company reduced its forecast for 2016 profit because of cost overruns on two oil and gas projects in the Middle East.
Adjusted earnings from engineering and construction this year will be C$1.30 (99 cents) to C$1.60 a share, compared with a previous outlook of C$1.50 to C$1.70, Montreal-based SNC said Thursday in a statement. Third-quarter results will include “unfavorable cost and revenue reforecasts” on the two projects, which SNC didn’t identify.
SNC dropped 5.7 percent to C$51.79 at 9:48 a.m. in Toronto. Earlier the stock dipped as much as 6.1 percent, its biggest intraday decline since Aug. 6, 2015. SNC had gained 34 percent this year through Wednesday, exceeding the 13 percent gain of Canada’s benchmark S&P/TSX Composite Index.
Talks are taking place to resolve the “commercial issues” in the two contracts, SNC also said. The company continues to aim for adjusted earnings before interest, taxes, depreciation and amortization of 7 percent of revenue next year.