The head of SNC-Lavalin Group Inc. said it will scale down its operations in 15 countries and swear off bidding on fixed-price contracts in the mining industry as it reported a loss in its latest quarter.
“We remain confident that we can deliver our 2019 outlook, despite being disappointed with our first-quarter performance,” Neil Bruce said in a statement Thursday.
“We will be focusing on our core geographies and are removing unprofitable revenues across 15 countries where we have sub-scale operations.”
“We also stopped bidding on lump sum EPC (earnings, procurement and construction) projects, as going forward we will be undertaking lump sum EPC work in infrastructure and oil and gas only in our core regions where we have strong capabilities,” Bruce added.
SNC-Lavalin is firmly rooted in both construction and engineering, exposing it to potentially higher margins, but also the cost overruns and fixed-price contracts that can plague the world of builders.
Bruce noted the company is undergoing an organizational revamp, combining its oil and gas business with its mining unit as part of a cost-reduction program under chief operating officer Ian Edwards, who was appointed in late January.
The engineering and construction firm said it lost $17.3 million or 10 cents per share for the quarter ended March 31. That compares with a profit of $78.1 million or 44 cents per share in the first quarter of last year.
Revenue totalled $2.36 billion, down from $2.43 billion a year ago.
On an adjusted basis, SNC said it earned 21 cents per share for the quarter compared with an adjusted profit of 77 cents per share a year earlier.
The results included an adjusted loss of eight cents in its engineering and construction business, while its capital investments business earned 29 cents per share in its most recent quarter.
That compared with an adjusted profit of 51 cents from the engineering and construction side a year ago, while the capital investments business earned 36 cents per share.
The Canadian Press