Shares of SNC-Lavalin Group (TSE:SNC) were trading slightly higher this morning, despite the company having posted second quarter results that fell below its own and analysts’ expectations.
In the quarter ending June 30, SNC reported a profit of C$0.17 per share, less than half of its own target of C$0.44 and the analyst consensus of C$0.34.
The company attributed the lower earnings to cost overruns in two infrastructure projects and an energy project. But investors appear confident that a turnaround is likely, given SNC’s receipt of the contract to upgrade the Champlain Bridge and a considerable backlog of orders, which stands at C$12.4 billion higher than the C$11.6 billion from the previous quarter of 2015.
Quarterly revenues also improved year over year, 33% better to be exact, reaching C$2.3 billion. And net losses of C$18.5 million from engineering and construction activities and operations and maintenance were less insidious than the C$46.9 million in the second quarter 2014.
Net income from investments in infrastructure concessions totaled $ 45 million in the second quarter of 2015, compared to $ 78.9 million (52 cents/share) for the corresponding quarter in 2014.
The Board of Directors declared a cash dividend of 25 cents per share payable September 3, 2015 to shareholders of record August 20, 2015.
SNC-Lavalin is one of the leading engineering and construction groups in the world. Founded in 1911, the company employs 45,000 people globally - including 16,650 in Canada, specializing in the infrastructure, hydrocarbons and mining sectors.
CIBC World Markets analyst Paul Lechem has reiterated a ‘hold’ rating for SNC, noting that the company’s management is keeping its 2015 adjusted earnings preview for engineering activities in the range C$1.30 $ -C$1.60 per share. He stressed that since the beginning of the year the company has recorded a profit of C$0.43, pointing to a very strong second half of the year.