Reuters: Global Markets: SNC-Lavalin shares sink on profit warning

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SNC-Lavalin shares sink on profit warning Oct 16th 2013, 14:28 Tweet Share this Email Print Reprints Related Topics Hot Stocks » Asian Markets » Pedestrians walk past a sign for the head office of SNC Lavalin in downtown Montreal March 26, 2012. Credit: Reuters/Christinne Muschi TORONTO | Wed Oct 16, 2013 10:28am EDT TORONTO (Reuters) - Shares of Canadian construction and engineering company SNC-Lavalin Group Inc (SNC.TO) tumbled as much as 7 percent in early trade on Wednesday, after the company slashed its profit forecast, raising questions about its recovery plan. SNC, which has struggled in the wake of a far-reaching corruption and ethics scandal that has toppled senior executives, primarily blamed project cost overruns on contracts in North Africa and in its hospital and roads division. A C$75 million ($72.33 million) charge for a European reorganization and weak mining demand also factored in the lower forecast, it said. The Montreal-based company said it now sees 2013 profit at C$10 million to C$50 million, down from an earlier estimate of C$220 million to C$235 million. SNC's stock was down 5 percent to C$41.94 on the Toronto Stock Exchange on Wednesday morning. "While we recognize that some of these cost re-forecasts could be one-time in nature, we expect the recurrence of write-offs at SNC could be troubling to credit rating agencies and lenders," RBC Capital Markets analyst Sara O'Brien said in a note. "While SNC doesn't currently utilize much credit, given that it has a portfolio of large fixed bid construction contracts, it needs access to credit lines to provide letters of guarantee." At the end of 2012, SNC had C$2 billion in letters of guarantee issued, the analyst wrote. ($1 = $1.0369 Canadian) (Reporting By Susan Taylor; Editing by Chris Reese) Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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