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SNC Lavalin CEO aims to ease worries over ongoing court case and diplomatic woes

The Canadian Press
SNC Lavalin CEO aims to ease worries over ongoing court case and diplomatic woes

MONTREAL — The head of SNC-Lavalin Group Inc. tried to assuage concerns over criminal charges at home and diplomatic tensions with the embattled regime in Saudi Arabia, saying the challenges will not hurt business.

“Despite the political issues we’ve had to contend with, our business is solid,” chief executive Neil Bruce told analysts during a conference call.

On Oct. 10, the Montreal-based company’s stock plunged to its lowest level since early 2016 after federal prosecutors announced they would not invite SNC to negotiate a remediation agreement over fraud and corruption charges that stemmed from alleged dealings with the Libyan regime under Moammar Gadhafi between 2001 and 2011 — “a completely distant era,” Bruce said.

“It’s when I did my MBA at Newcastle University, to put in perspective,” he added. “It hasn’t had any impact whatsoever in our ability to bid.”

In February 2015, the RCMP charged SNC and two subsidiaries with paying nearly $48 million to Libyan public officials to influence government decisions. The RCMP also hit the company, its construction division and a subsidiary with one charge each of fraud and corruption for allegedly defrauding various Libyan organizations of about $130 million.

A conviction could bar SNC from working with the federal government for up to 10 years.

An appeal of the Public Prosecution Service of Canada’s decision to forgo an invitation to settlement negotiations is ongoing.

Bruce confirmed he was in Saudi Arabia recently, but said he kept clear of the “Davos in the Desert” conference. Many prominent international officials backed out of the event following the controversy over the alleged murder of journalist Jamal Khashoggi.

Bruce also pointed to an “unfortunate diplomatic incident” between Canada and Saudi Arabia when a tweet regarding human rights from Foreign Affairs Minister Chrystia Freeland set off a trade embargo by the monarchy last August.

“We continue to monitor the situation closely and we’re engaged with our clients,” he said, but insisted the 9,000-plus staff and robust revenues — $992 million last year — remained unaffected by the row.

On Nov. 1, SNC reported a third-quarter profit of $120.7 million, up from $103.6 million a year ago.

Profits amounted to 69 cents per share for the three-month period ended Sept. 30, up from a profit of 59 cents per share a year earlier, the company said.

Revenue totalled $2.56 billion, down from $2.63 billion in the third quarter of last year.

On an adjusted basis, SNC earned 96 cents per share for the quarter, up from an adjusted profit of 78 cents per share in the third quarter of 2017.

Analysts on average had expected a profit of 67 cents per share, according to Thomson Reuters Eikon.

SNC’s outlook forecasts an adjusted profit of $3.60 to $3.85 per diluted share for 2018.

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