MONTREAL – SNC-Lavalin says it will reduce the company’s global workforce by 4,000, or nine per cent of the total, over an 18-month period starting in 2015.
The Montreal-based engineering and construction company (TSX:SNC) says the job cuts — which will significantly reduce the company’s profit this year but save money over the longer term — are part of its ongoing efforts to get out of underperforming business segments.
About three-quarters of the downsizing will be directed at SNC’s activities outside of Canada — with particular attention given to a major global slowdown in the mining sector, one of the company’s areas of expertise.
“While we remain committed to maintaining a leadership position in mining, a major global slowdown in the sector has created a ripple effect through other industries, and is combining with a general economic slowdown, particularly in the BRIC countries,” said Robert Card, SNC’s president and CEO.
“We must therefore improve our agility and client focus in order to capitalize on the most promising opportunities in key growth markets.”
SNC-Lavalin is one of the world’s leading engineering and construction group, with offices in more than 50 countries and about 45,000 employees.
During the quarter, SNC-Lavalin completed the acquisition of U.K.-based Kentz — a $2.1-billion deal announced in June.
Kentz was the first big acquisition for Card, who was hired after the engineering firm disclosed financial irregularities two years ago that led to the departures of several top executives.
The downsizing was announced with SNC’s third-quarter financial results, which showed an overall profit due to its investments in major infrastructure businesses and a reduced loss from engineering and construction activities.
The company earned $69 million or 45 cents for the three months ended Sept. 30 compared with a loss of $72.5 million or 48 cents per share in the third quarter of 2013. Revenue totalled $2 billion, up from $1.95 billion a year ago.
The company’s revenue backlog totalled $12.5 billion, a 51.0 per cent increase compared with the end of 2013.
Still, the company is lowering its guidance for its 2014 earnings per share.
Including the Kentz transaction and the job cuts announced Thursday, SNC-Lavalin expects to earn between 40 and 55 cents per share. If those aren’t included, the revised guidance would be a range of between $2.15 and $2.40 per share. The estimates did not include a potential gain from the sale of its investment in AltaLink, an Alberta utility.
SNC’s previous range guidance range was earnings per share of between $2.80 and $3.05 per share.