Top Stories
Top Stories

UPDATE 1-SNC-Lavalin to speed up cost cuts after profit plunges

(Adds details on cost savings program; outlook)

May 2 (Reuters) - SNC-Lavalin Group Inc on Thursday reported a 73 percent plunge in adjusted quarterly profit and said it would speed up its plans to simplify its operational structure to save costs and improve efficiency.

The Montreal-based engineering and construction company, which has been under pressure from rising trade challenges in Saudi Arabia and China as well as corruption charges back home, said it was disappointed with its first quarter performance.

However, SNC said it was confident of delivering its 2019 outlook for earnings and said plans to cut the overhead cost by $250 million annually.

For the rest of 2019, it aims to cut just over $100 million in costs.

The more than 100-year old company, which reiterated it 2019 outlook, has been looking to focus on some core geographies, while removing unprofitable businesses in 15 countries where it has smaller operations.

SNC had also said that it stopped bidding on lump-sum engineering, procurement, and construction projects in mining, and plans to take such projects only in the infrastructure and oil & gas sectors.

Adjusted net income attributable to shareholders fell to C$36.9 million ($27.47 million), or 21 Canadian cents per share, in the first quarter ended March 31, from C$136 million, or 77 Canadian cents per share, a year earlier.

The company said delays in claims settlements and issues with some projects have hit first-quarter earnings, with revenue falling to C$2.36 billion from C$2.43 billion. ($1 = 1.3431 Canadian dollars) (Reporting by Shanti S Nair in Bengaluru; Editing by Shailesh Kuber)