MONTREAL — SNC-Lavalin Group Inc. is restructuring its money-losing resources business with a plan to sell off or shut down the non-profitable parts and fold the remnants into its engineering services division.
The announcement Friday came alongside earnings that fell short of analysts’ expectations as the engineering giant lost $111.6 million in the second quarter—compared to $2.12 billion a year earlier.
“The legacy resources projects business and associated lump-sum turnkey projects will be largely wound down and the projects complete by the end of 2020,” SNC-Lavalin said in a release Friday.
The company forecasts the business will be profitable next year.
The move, which wraps up a strategic review launched by CEO Ian Edwards when he took the helm in June 2019, narrows SNC’s focus on resources to the Americas and the Middle East, where the company said it has “profitable relationships with long-standing customers” in energy and mining.
The turn away from resources will reduce that segment’s operations to nine countries from 30 and cut its headcount to 8,000 from 15,000 by the end of the year, with 2,000 more departures expected by 2021, SNC said.
The resources division continued to drag on profitability last quarter. Its so-called lump-sum turnkey projects—fixed-price contracts under which companies have to eat any cost overruns—accounted for 78% of the company’s $122 million in adjusted losses before interest and taxes.
All Business Buzz Stories