Oil sands loss drags on Aecon’s results
By Helen Wright09 March 2011
Aecon reported a -5.8% decline in profits for 2010 to CA$ 160.6 million (US$ 165.5 million), due in a large part to a CA$ 55 million (US$ 56 million) loss on an industrial project in Canada.
The contractor said it incurred a loss from its contract to complete the field construction of Suncor's Firebag III central oil sands plant facilities in Alberta, Canada, due to a modification in the deal. Aecon is constructing pipes for the extraction of crude bitumen contained in the Canadian oil sands for Suncor - Canada's largest energy company.
The loss on the contract translated to a full-year operational loss for Aecon's industrial segment of CA$ 17.5 million (US$ 18 million) in 2010, compared to a profit of CA$ 50.5 million (US$ 52 million) in the prior year.
Chairman and CEO John Beck said the Canadian construction company remained upbeat on prospects for future oil sands projects, despite the unsatisfactory financial result.
"We remain as committed and optimistic as ever for Aecon's ongoing success in the oil sands," Mr Beck said.
Revenues in Aecon's industrial segment grew last year to CA$ 310 million (US$ 319 million), compared to CA$ 191 million (US$ 197 million) in 2009. Similar growth in the company's infrastructure and building segments offset a small decline in concessions and led to overall +21% growth in Aecon's revenues year-on-year to CA$ 2.75 billion (US$ 2.83 billion).
Backlog at 31 December, 2010, was CA$ 2.45 billion (US$ 2.52 billion), a +12% increase over 2009, as a doubling of backlog in the Infrastructure segment offset declines in the Buildings and Industrial segments.
Mr Beck praised the "ongoing strength and durability" of Canada's infrastructure markets, and said the country's resources and power markets had a "bright future".
He said 2010 had been a "challenging year", but added, "with the building division now combined within the infrastructure division, and the one-time impact of a project loss in the Industrial segment fully behind us, we have turned the page. With the benefit of lessons learned, I believe Aecon's outlook for 2011 and 2012 is very strong."