SNC-Lavalin Issues Another Profit Warning and Announces Reorganization; Lowering FVE
We lowered our fair value estimate for SNC-Lavalin from CAD 34, to CAD 33, after the no-moat engineering and construction firm issued its third profit warning this year. Management announced that second-quarter results will fall below its prior expectations as a result of revised cost forecasts on lump-sum turnkey, or LSTK, projects in the resources and infrastructure segments. Additionally, the company will take roughly a CAD 1.9 billion noncash impairment charge in the oil and gas business as ...SNC-Lavalin Group is an engineering and construction group, and is engaged in the ownership of infrastructure and in the provision of operations and maintenance services. Co.'s segments are: mining and metallurgy, which provide tailored solutions for projects in the aluminum, gold, copper product sectors, among others; oil and gas, which includes projects for oil and gas and resources companies; power, which includes projects and services in hydro, and nuclear and thermal power generation, among others; infrastructure, which include infrastructure & construction, and operations and maintenance; capital, which invest in equity or subordinated debt into projects for public services.
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