MONTREAL — SNC-Lavalin Group Inc. anticipates a double-digit increase in adjusted profits in 2018 as the acquisition of British engineering firm WS Atkins offsets continuing market challenges in some sectors.
The Montreal-based engineering and construction firm said its full-year adjusted net earnings should range between $3.60 and $3.85 per diluted share. That’s 12.5 to 20 per cent higher than the $3.20 per share earned last year.
“We have a positive outlook on growth and confidence in delivering on our 2020 vision,” CEO Neil Bruce said Thursday in a news release.
SNC-Lavalin said it expects the Atkins, mining and metallurgy, and power segments will improve while oil and gas along with infrastructure segments will be in line with 2017.
“Our recent selection as a preferred proponent for the Montreal light rapid transit system underscores the quality of our organic prospects and bolsters our reputation as the leader in infrastructure in Canada.”
It delivered $40 million of cost savings from the $3.6-billion Atkins acquisition last year and said it remains on track to reach $120 million in savings by the end of 2018 when the integration is completed.
SNC-Lavalin capped a strong year by seeing its net profit surge to $52.4 million in the fourth quarter as revenue jumped 32 per cent from the prior year.
Its profit attributable to shareholders amounted to 30 cents per diluted share for the quarter ended Dec. 31. That compared with a profit of $1.6 million or a penny per share in the final quarter of 2016.
Revenue totalled $2.92 billion, up from $2.21 billion.
For the full year, it earned $382 million or $2.34 per share, up from $255.5 million or $1.70 per share in 2016.
Revenues increased nearly 10 per cent to $9.3 billion.
Shares of SNC-Lavalin jumped on the Toronto Stock Exchange on the news, rising $2.50, or 4.6 per cent, to $55.98 at mid-day.
“Through the acquisition of Atkins, the largest and most transformative in our history, we continued to deliver on our strategic growth objectives while positioning the company for future opportunities,” Bruce added.
The company said its quarterly dividend will rise by five per cent to 28.7 cents per share, payable March 22.
On an adjusted basis, SNC-Lavalin said it earned $172.7 million or 98 cents per diluted share in its most recent quarter mainly from its core engineering and construction business, compared with an adjusted profit of $116.1 million or 77 cents per diluted share a year earlier.
In 2017, adjusted profits reached $522.3 million, up from $387.1 million or $2.58 per share.
Analyst Maxim Sytchev of National Bank Financial said the stronger-than-expected results reinforce his positive outlook for the company.
“With SNC trading at such a material discount versus U.S. peers, we are feeling better about our positive call as we are not seeing a step-down in company’s profitability,” he wrote in a report.
Derek Spronck of RBC Capital Markets added that the strong fourth quarter highlights that operational improvements are taking hold.
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Companies in this story: (TSX:SNC)
Ross Marowits, The Canadian Press