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WSP Global raises earnings forecast as profits soar

The Canadian Press
WSP Global raises earnings forecast as profits soar

MONTREAL — WSP Global Inc. has raised its earnings forecast for the year amid rising revenues fuelled by organic growth as well as recent acquisitions.

Along with higher adjusted earnings, the engineering firm said it now expects revenues for this year to hit between $10.7 billion and $11 billion, up from a previous outlook of $10 billion to $10.6 billion.

The more optimistic outlook comes after WSP reported that net earnings rose 69 per cent year-over-year in its second quarter to top $150 million.

The growth occurred across “all our key regions and segments,” said chief executive Alexandre L’Heureux on a conference call with analysts.

He highlighted the United States in particular, where a one-fifth increase in contract awards so far this quarter followed a 25 per cent year-over-year boost to WSP’s total second-quarter backlog, which stood at a record $14.3 billion.

The U.S. contract wins “reflect a rising need for improved infrastructure and for our expertise, which is a similar trend we see globally,” L’Heureux said.

“We are seeing better performance than what we were anticipating at the beginning of this year essentially everywhere _ with the exception of mainland China, where I think it’s widely recognized that the prolonged lockdown had its effect and impact on the business,” he added.

The chief executive added that WSP’s entire Asian operation accounts for less than three per cent of profits.

WSP’s rapid growth comes on the heels of at least eight buy-ups since May 2022 – including the 6,000-strong environmental consulting business of U.K.-based John Wood Group – on top of nine per cent year-over-year organic growth in net revenue last quarter.

Once a boutique firm called Genivar, the 64-year-old engineering and design company has more than quadrupled its head count over the past decade, swelling to about 67,300 employees as of mid-May, including an additional 10,900 in 2022.

Its employee numbers far exceed rival SNC-Lavalin’s peak head count, which now sits at roughly 36,500 after the Montreal-based competitor shed its construction and oil and gas businesses over the past five years. WSP’s $3.63-billion revenue clocks in 70 per cent above SNC’s latest quarterly figure of $2.13 billion, despite the latter’s healthy rebound under CEO Ian Edwards since 2019.

In the three months ended July 1, WSP firm reported that net earnings attributable to shareholders rose reached $150.7 million compared to $89.3 million in the same period a year earlier.

Second-quarter revenues jumped 32 per cent from $2.76 billion the year before, the Montreal-based company said.

WSP said adjusted net earnings increased to $1.56 per share versus $1.30 per share a year prior, beating expectations of $1.49 per share, according to financial markets data firm Refinitiv.

For the full year, the company is projecting adjusted earnings of $1.9 billion to $1.93 billion versus an earlier guidance of between $1.76 billion and $1.84 billion.

© 2023 The Canadian Press

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