SNC-Lavalin building

SNC-Lavalin building

Troubled Canadian contractor SNC Lavalin says it is seeking extra sources of liquidity after penalty charges in Algeria and confusion over a payment in Libya dragged on its first half results.

For the six-months to the end of June, net profit stood at CA$ 15.9 million (US$ 15.3 million), reduced from CA$ 98 million (US$ 94.4 million) for the same period last year.

Revenues for the first half were up +4% year-on-year to CA$ 3.8 billion (US$ 3.7 billion), while the backlog totalled CA$ 9.7 billion (US$ 9.3 billion) at the end of June, compared to CA$ 10.1 billion (US$ 9.7 billion) at the end of December 2012.

The results were impacted by a CA$ 70.1 million (US$ 67.5 million) loss relating to a legal a claim against the company’s oil & gas division in Algeria, alleging late penalties under a fixed-price project. SNC Lavalin said it would take all necessary actions to resolve these penalties.

In Libya, the company reported confusion over funds worth CA$ 47 million (US$ 45.3 million) in its infrastructure & environment division. It said it faced an attempt to draw down on the amount within the country for advanced payments for a project which it said had been halted since the start of civil unrest in Libya.

“The company is seeking to clarify the situation surrounding this attempt to draw on the letters of credit and will use all legal and other means available to prevent any draws,” SNC Lavalin said.

Liquidity warning


SNC Lavalin said it held CA$ 800 million (US$ 770 million) in cash on 30 June, 2013, down from CA$ 1.2 billion (US$ 1.2 billion) at the same point last year. It said decrease was mainly due to the timing of working capital requirements to complete some Canadian projects.

It warned that a number of its current projects would continue to require working capital, and additional liquidity may be required. SNC Lavalin said it was considering various possibilities for funding, including potential asset sales.

President and CEO Robert Card said, “We are in active discussions around potential transactions with respect to certain assets and, while there’s no guarantee that a transaction will occur, we are pleased with our progress thus far.”

SNC Lavalin – which is also currently at the centre of several corruption investigations.

– expects to achieve full-year net profit in the range of CA$ 220 million (US$ 212 million) and CA$ 235 million (US$ 226 million).

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