WSP Global hopes infrastructure spending will boost lagging Quebec business
MONTREAL - Engineering firm WSP Global (TSX:WSP) hopes infrastructure spending in Quebec will help kick-start lagging business on the company's home turf.
"What is encouraging now is we're seeing increased activity," CEO Pierre Shoiry said during a conference call with analysts on Tuesday. "We have some important proposals in and we expect to stabilize the business and hopefully see some growth in 2015."
WSP's Canadian operations continued to slow in the first quarter, with revenues from existing operations falling 13 per cent on an 8.4 per cent decrease in Quebec.
In addition to tightened government spending in Quebec and in Ontario outside of Greater Toronto, the company has been hit by a lack of new capital spending projects in the mining industry.
However, Shoiry said he's confident Quebec operations will stabilize later this year now that municipal and provincial elections are history and the company has received certification to bid on new contracts.
Despite vowing to balance the provincial budget in two years, Quebec's new Liberal government has promised to spend $15 billion on infrastructure projects and Ottawa is proceeding with a multibillion-dollar bridge in Montreal.
WSP (TSX:WSP) has said it will bid on several large contracts, including the Turcot highway near Montreal, the new Champlain bridge and a suburban Montreal transit project.
The company said its profits surged 19 per cent to $17.3 million in its latest quarter on higher revenues around the world aside from Canada, Germany and South Africa.
The Montreal-based company said its net earnings attributable to shareholders were 33 cents per share for the period ended March 29, in line with analysts' estimates. That compared with 28 cents per share or $14.5 million a year earlier.
Revenues were $511.1 million, up 6.8 per cent from $478.7 million year over year.
WSP Global said its backlog hit a record $1.72 billion, representing about 10 months of revenue, up 15 per cent from the fourth quarter.
Shoiry said the company's performance and recent acquisitions put it on the path to achieve its objective of having $2.3 billion of annual revenues by the end of 2015.
"We are satisfied with our first-quarter results, which are for the most part in line with our expectations," he told the analysts.
WSP Group recently announced it was expanding its reach in Western Canada's oil and gas sector with the acquisition of Focus Group Holding Inc., a 1,700-employee Alberta engineering and geomatics firm, for $366 million.
Maxim Sytchev of Dundee Securities said while WSP's Canadian business was down, it represented only a quarter of the overall company prior to the Focus acquisition.
"The weakness in Canada (particularly Eastern Canada) was offset by stronger performance from the rest of the business. With strong backlog momentum, we should see organic growth reacceleration as the year progresses," he wrote in a report.
On the Toronto Stock Exchange, WSP's shares closed down 15 cents at $38.05 on Tuesday.
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