SNC-LAVALIN ANNOUNCES ITS RESULTS FOR THE SECOND QUARTER AND SIX-MONTH PERIOD ENDED JUNE 30, 2012
SNC-Lavalin Group Inc. (TSX:SNC) announced its results today for the second quarter and six-month period ended June 30, 2012.
Second Quarter Results
For the second quarter of 2012, net income attributable to SNC-Lavalin shareholders was $32.5 million ($0.21 per share on a diluted basis), compared to $102.2 million ($0.67 per share on a diluted basis) for the comparable quarter of 2011. The net income excluding Infrastructure Concession Investments (“ICI”) was $2.0 million, compared to $60.5 million for the second quarter of 2011, mainly reflecting operating losses in the Power and Infrastructure & Environment segments, as well as a lower contribution from the Hydrocarbons & Chemicals segment. The net income from ICI decreased to $30.5 million, compared to $41.7 million for the second quarter of 2011, mainly due to lower dividends from Highway 407, as a special dividend of $18.5 million was declared and paid to the Company in the second quarter of 2011, as well as a lower net income from Shariket Kahraba Hadjret En Nouss S.p.A. (“SKH”), partially offset by a higher net income from AltaLink.
For the second quarter of 2012, revenues increased by 14.2% to $1.9 billion, mainly due to an increase of 39.4% in the Services category.
For the six-month period ended June 30, 2012, net income attributable to SNC-Lavalin shareholders was $99.6 million ($0.66 per share on a diluted basis), compared to $178.3 million ($1.17 per share on a diluted basis) for the same period of 2011. The net income excluding ICI was $44.0 million, compared to $112.2 million for the first six months of 2011, mainly reflecting lower contributions from the Power, Hydrocarbons & Chemicals and Operations & Maintenance segments, as well as an operating loss in the Infrastructure & Environment segment, partially offset by a higher contribution from the Mining & Metallurgy segment. For the same reasons given above, the net income from ICI decreased to $55.6 million, compared to $66.1 million for the first six months of 2011.
“The second quarter was difficult in terms of project execution, but we are encouraged by our strong financial position and backlog,” said Ian Bourne, Vice-Chairman and Interim Chief Executive Officer, SNC-Lavalin Group Inc.
The Company’s financial position remained solid with cash and cash equivalents totalling $1.2 billion as at June 30, 2012.
Revenues for the six-month period ended June 30, 2012 increased by 11.5% to $3.7 billion, compared to $3.3 billion for the same period in 2011, mainly due to an increase of 39.4% in the Services category.
Revenue backlog remained strong at $10.7 billion at the end of June 2012, compared to $10.1 billion at the end of December 2011, with increases in the Services and Packages categories of activity.
The Company’s return on average shareholders’ equity was 14.8% for the 12-month period ended June 30, 2012.
Mr. Bourne also stated, “We are pleased with our progress in implementing the remedial measures emanating from the internal investigation conducted in the first quarter of 2012.”
2012 Outlook Update
The Company is revising its previously announced 2012 Outlook for which the expected 2012 net income was to be in line with full year 2011 net income. Principally as a result of the unfavourable cost reforecasts of approximately $50 million identified as part of ongoing project reviews and recorded in the second quarter of 2012 on two major fixed-price projects, one in the Power segment and one in the Hydrocarbons & Chemicals segment, the 2012 net income is currently expected to be in a range of $325 million to $340 million. This Outlook continues to be based on (i) the expectation that the Power and Mining & Metallurgy segments, mainly based on their current backlog, and the Infrastructure Concession Investments segment will be the main contributors to net income, while the Hydrocarbons & Chemicals and Infrastructure & Environment segments will continue to be challenging throughout 2012, and (ii) the methodology described in the Company’s 2011 Management’s Discussion and Analysis under the heading “How We Budget and Forecast Our Results”, and which remains subject to the risks and uncertainties described in the Company’s public disclosure documents.
The Board of Directors today declared a cash dividend of $0.22 per share, payable on August 31, 2012 to shareholders of record on August 17, 2012. This dividend is an “eligible dividend” for income tax purposes.
SNC-Lavalin is one of the leading engineering and construction groups in the world and a major player in the ownership of infrastructure, and in the provision of operations and maintenance services. SNC-Lavalin has offices across Canada and in over 40 other countries around the world, and is currently working in some 100 countries. www.snclavalin.com
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Reference in this press release, and hereafter, to the “Company” or to “SNC-Lavalin” means, as the context may require, SNC-Lavalin Group Inc. and all or some of its subsidiaries or joint ventures, or SNC-Lavalin Group Inc. or one or more of its subsidiaries or joint ventures. Statements made in this press release that describe the Company’s or management’s budgets, estimates, expectations, forecasts, objectives, predictions or projections of the future may be “forward-looking statements”, which can be identified by the use of the conditional or forward-looking terminology such as “anticipates”, “believes”, “estimates”, “expects”, “may”, “plans”, “projects”, “should”, “will”, or the negative thereof or other variations thereon.
The 2012 outlook referred to in this press release is forward-looking information and is based on the methodology described in the Company’s 2011 Management’s Discussion and Analysis under the heading “How We Budget and Forecast Our Results” and is subject to the risks and uncertainties described in the Company’s public disclosure documents, including risks resulting from the Independent Review and the Company’s continuing review of compliance matters. The purpose of the 2012 outlook is to provide the reader with an indication of management’s expectations, at the date of this press release, regarding the Company’s future financial performance and readers are cautioned that this information may not be appropriate for other purposes.
The Company cautions that its actual actions and/or results could differ materially from those expressed or implied in forward-looking statements, or could affect the extent to which a particular projection materializes, as a result of risks and uncertainties relating to: (a) cost overruns from fixed-price contracts; (b) failure to meet scheduled dates or performance standards on a particular project; (c) attracting and retaining qualified personnel and any strike, partial work stoppage or other labour actions by the Company’s or its subcontractors’ unionized employees; (d) failure of the Company’s joint venture partners to perform their obligations; (e) failure by the Company’s subcontractors to deliver their portion of a particular project according to contractual terms; (f) the financial performance of the Company’s infrastructure concession investments during a particular concession period; (g) the Company obtaining new contract awards; (h) revenue backlog and whether such revenue backlog will ultimately result in earnings and when revenues and earnings from such backlog will be recognized; (i) foreign currency exchange and interest rates; (j) credit risk and the delay in collection from the Company’s clients; (k) information management including its integrity, reliability and security; (l) the inherent limitations of the Company’s control framework and the effectiveness of the measures implemented by the Company to strengthen its internal controls over financial reporting following the identification by the Company of material weaknesses relating to the design and operational effectiveness of its internal controls over financial reporting; (m) uncertain economic and political conditions in the countries in which the Company does business; (n) any lack of strong safety practices by the Company or its subcontractors exposing the Company to lost time on projects, penalties, lawsuits and impact on future contract awards; (o) the Company’s inability to comply with environmental laws and regulations; (p) the Company’s reputation as a result of, among others, any quality or performance issues on its projects, a poor health and safety record, non-compliance with laws or regulations by the Company’s employees, agents, subcontractors, suppliers and/or partners, or creation of pollution and contamination; (q) the inability to adequately integrate an acquired business in a timely manner; (r) non-compliance with laws and regulations by an employee, agent, supplier, subcontractor and/or partner of the Company or any further regulatory developments; (s) failure by the Company’s employees, agents, suppliers, subcontractors and/or partners to comply with anti-bribery laws; (t) any litigation and/or legal matters to which the Company is a party; (u) any negative publicity associated with the Independent Review led by the Company’s Audit Committee of the facts and circumstances surrounding certain payments that were documented to construction projects to which they did not relate, and certain other contracts, as well as any sanctions that could be brought against the Company in connection with possible violations of law or contracts should additional facts adverse to the Company become known in connection with such Independent Review including as to matters beyond its scope; (v) the proposed class action lawsuits against the Company with the Ontario Superior Court and the Quebec Superior Court; and (w) the investigations of the Royal Canadian Mounted Police and the World Bank principally relating to an unsuccessful bid by a subsidiary to act for the Bangladeshi government in supervising a project contractor.
For more information on risks and uncertainties, and assumptions that would cause the Company’s actual results to differ from current expectations, please refer to the section “Risks and Uncertainties” and the section “How We Analyze and Report our Results”, respectively, in the Company’s 2011 Financial Report under “Management’s Discussion and Analysis” and the section “Risks and Uncertainties” in the Company’s second quarter 2012 Management’s Discussion and Analysis. The forward-looking statements herein reflect the Company’s expectations as at the date of this press release and are subject to change after this date. The Company does not undertake any obligation to update publicly or to revise any such forward-looking statements, unless required by applicable legislation or regulation.
Media ContactLeslie Quinton
Senior Vice-President, Global Corporate Communications
SNC-Lavalin Group Inc.
Vice-President, Investor Relations
SNC-Lavalin Group Inc.