EUR 850.00 For Business Accounts Only

Morningstar | We Assign a No-Moat Rating to Global Professional Service and Project Management Firm, SNC-Lavalin

SNC-Lavalin is among the handful of global engineering and construction firms that specialize in larger and more complex construction and development projects. The company has made major strides in strengthening core operations and erasing the stain of past questionable business practices.SNC’s E&C segments serve four industries: oil and gas (2017 revenue and EBIT of CAD 3.4 billion, 35% of E&C total; and CAD 246 million, or 35%); mining and metallurgy, with revenue and EBIT of CAD 433 million (5%) and CAD 21 million (3%); power, with revenue and EBIT of CAD 3.1 billion (35%) and CAD 271 million (40%); and infrastructure, with revenue and EBIT of CAD 2.1 billion (25%) and CAD 158 million (22%).SNC seeks to differentiate itself in two ways. First, SNC is a global E&C, possessing full-service project capabilities that allow it to bid alone if necessary for large contracts in which a broad array of skills are necessary--for example, a remote mining development that also requires roads, power transmission, and port construction. SNC has earned a favorable long-term track record in successfully completing major projects.The other major differentiator is SNC's robust capital investments segment, in which the company participates in public-private partnerships, or P3s, to create infrastructure assets such as toll roads, power plants, and airports. In these arrangements, SNC invests as part of a group, typically including a public agency specifically created to design and build a toll road, railway, or health care facility. In most cases, SNC typically captures both the EPC award as well as long-term operations and maintenance contracts as well. P3s have become increasingly popular as cash-strapped public entities seek strategies to maintain and improve infrastructure.CEO Neil Bruce continues to aggressively reposition the company to better compete in a "lower for longer" commodity price environment. The planned acquisition of U.K.-based WS Atkins will broaden its base of recurring revenue and strengthen its core infrastructure offering. SNC continues to broaden capabilities and its ability to leverage in-market advantages in Canada to sustain and improve profitability.