Montreal construction engineering firm SNC-Lavalin Group Inc. has revised its financial outlook downward and the audit committee of its board of directors is investigating $35 million in payments documented for construction projects to which they did not relate.
In a press release, the engineering and construction firm stated its net income for 2011 “is expected to be approximately 18 per cent (or approximately $80 million) below its previously announced 2011 outlook.”
In 2010, the firm earned $437 million on revenues of $6.315 billion. In the management discussion and analysis released last November with the financial results for the period ending September 30, SNC-Lavalin stated it expected its net income in 2011 "to remain in line with 2010, when excluding the gains from the disposals of certain assets and investments recognized in 2010.”
But on Tuesday the firm said it expected to record, in the fourth quarter of 2011, a loss of about $23 million “from a revised position of the Company’s net financial exposure on its Libyan projects.“
It also expects to record expenses of about $35 million “relating to certain payments made in the fourth quarter of 2011 that were documented to construction projects to which they did not relate and, consequently, had to be recorded as expenses in the quarter.”
“Independent legal counsel were retained in this connection,” the firm stated in the press release. “The investigation’s current findings support the Company’s accounting treatment of these payments. The Board of Directors is taking steps to implement changes and further appropriate actions arising from the investigation.”
The firm is also working with its lawyers and external auditors to "resolve all issues relating to the investigation."
When SNC-Lavalin last reported financial results in November, its revenues for the first nine months of the year were $5.088 billion, and net income for the same period was 308.64 million.
During the three months ending Sept. 30, it earned $128.62 million on revenues of $1.78 billion.
DCN DIGITAL MEDIA
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