SNC-Lavalin CEO puts 'year of housekeeping' behind him and looks to rebuilding
MONTREAL - The CEO of SNC-Lavalin called 2013 a "year of housekeeping" as the company continued to deal with allegations of corruption and fraud and posted lower profit and revenue in its fourth quarter.
Chief executive Robert Card said Thursday that he expects this year to be one of rebuilding for the Montreal engineering and construction giant.
And by 2015 there should be a "beginning of a return to normalcy," he told financial analysts on a conference call.
"We have made good progress in 2013 on many fronts," Card said. "I'm confident we'll continue this momentum in 2014."
SNC-Lavalin (TSX:SNC) operates around the world and has been dealing with the fallout from multiple allegations of corruption levelled at certain former SNC senior executives, including its former CEO.
The reputation of the Canadian company has been tarnished since it disclosed in March 2012 that an internal investigation found that $56 million in questionable payments had been made.
SNC's former chief executive, Pierre Duhaime, was "relieved of his duties''' and was later charged with fraud involving $22.5 million in payments related to the construction of a Montreal hospital.
Last August, the company disclosed that 32 employees had admitted ethical violations under the company's three-month amnesty program. It was launched after both internal and police investigations into the allegations of fraud and corrupt practices in Canada and abroad.
SNC-Lavalin has since introduced a company-wide ethics and compliance program.
Card noted that SNC-Lavalin received approval last month to bid on public contracts in Quebec and called it a "key milestone."
Quebec's securities regulator gave the authorization in February after months of investigation and has said the company passed all checks from the province's anti-corruption squad and has ensured that all people associated with alleged improprieties have left the company.
The company recently hired a senior executive from Dow Chemical Co. to oversee its governance, ethics and compliance efforts as it works to restore confidence in its practices.
But SNC-Lavalin said it's confident in its long-term outlook and will raise the quarterly dividend to 24 cents per share, a four per cent increase from its current dividend.
In its financial results, the company said that its revenue fell to $2.12 billion in the fourth quarter from $2.42 billion a year earlier.
The $300-million reduction in revenue in the quarter was spread across most of SNC's activities, but was offset by increased revenue from its investments in infrastructure concessions, such as AltaLink, which is Albertaâ€™s largest regulated electricity transmission company.
SNC's overall net income fell to $92.6 million, from $93.9 million in the fourth quarter of 2012. The decrease would have been bigger without improvements from infrastructure concession investments.
Net income per diluted share fell to 61 cents from 62 cents a year earlier and were a penny below analyst estimates.
Its main operating activities â€” building, operating and maintaining major projects in several industries â€” had a loss of $31.3 million in the quarter, compared with $23.46 million in net income a year before.
Net income from infrastructure concession investments grew to $123.8 million from $70.4 million in the fourth quarter of 2012, offsetting most of the decline in SNC's operating activities.
The company said that several of its divisions â€” infrastructure and environment, oil and gas and mining and metallurgy â€” will continue to face challenges in the coming year.
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