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MONTREAL — The global rout in commodities and sputtering economic growth in many parts of the world is taking a toll on SNC-Lavalin Group Inc., forcing a major cut in its employee head count as the multinational company tries to carve out more sustainable operations for the years ahead.
Canada’s largest engineering and construction firm said Thursday it would slash 4,000 jobs as it deals with a collapse in global mining activity and stunted economic growth, particularly in emerging markets such as China. Montreal-based SNC also revised its 2014 profit outlook sharply downward as it reported third-quarter earnings that missed analyst estimates.
The stock tumbled 8 per cent in trading to $42.34, its biggest one-day loss since Feb. 28, 2012. That’s when the company disclosed an independent investigation into undocumented payments that subsequently ballooned into a wider corruption scandal.
“Investors probably weren’t expecting such a significant reduction in head count,” said Denis Durand, a partner at Montreal-based Jarislowsky Fraser Ltd., SNC’s largest shareholder. “The size of this surprised.”
The moves are part of a five-year effort by SNC chief executive Robert Card to revamp the company as he tries to turn it into one of the world’s largest engineering players and close the door on corporate conduct trouble that has forced out several senior executives.
The company paid $2.1-billion in June to acquire British-based oil and gas services specialist Kentz Corp. and strengthen its capability in higher-margin oil and gas. SNC management said it was not overly bothered by the recent drop in oil prices because its clients have long-term planning horizons.
But a major global slowdown in the mining sector has hurt, creating a “ripple effect” through other industries at a time economic growth is sputtering in many parts of the world, management said.
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