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SNC-Lavalin Group Inc. has stopped bidding on mining work and reduced its profit expectations for the second time in two weeks after failing to resolve a dispute with a key customer in South America.
Montreal-based SNC-Lavalin said in a statement on Monday it has halted all bidding on future mining engineering, procurement and construction projects. The move is one of several by the company as it tries to resolve unexpected problems on a mining contract with Chile’s Codelco, the world’s biggest copper producer. It also negotiated new debt covenants with lenders.
Due to the negative impact from the project, SNC-Lavalin could book a fourth-quarter 2018 loss of up to $350-million in the mining unit, the company said. That in turn would hurt overall annual profit, which is now expected to come in between $1.20 and $1.35 a share for 2018, the company said. That is down from a previous forecast of $2.15 to $2.30 a share.
Investors pushed down SNC stock another 7 per cent in afternoon trading in Toronto, to $34. The development is the latest in a growing list of problems for SNC-Lavalin chief executive Neil Bruce, who is also dealing with the corporation’s increasingly politicized legal trouble and uncertainty about its future business prospects in Saudi Arabia.
Shareholders, impatient for a resolution to the corruption and fraud charges the company faces, are also beginning to question its strategy.
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