SNC-Lavalin shares at 14-year low on near-term woes
By Arathy S Nair and Debroop Roy (Reuters) - SNC-Lavalin Group Inc shares slumped to a 14-year low on Tuesday, as investors worried about the near-term hit from the struggling Canadian construction company's restructuring plans, including a move to exit fixed-price contracts. Analysts and investors backed SNC's decision to end bidding for fixed-price contracts - which the company said was the root cause of its performance issues - but some questioned the lack of clarity. 'I am happy they are going to stop investing in the fixed-price contract, but I am really, really upset as to how they got into this position in the first place and how they screwed up,' said institutional investor David Taylor of Taylor Asset Management, which holds an undisclosed number of shares in the company.
By Arathy S Nair and Debroop Roy
(Reuters) - SNC-Lavalin Group Inc
Analysts and investors backed SNC's decision to end bidding for fixed-price contracts - which the company said was the root cause of its performance issues - but some questioned the lack of clarity.
"I am happy they are going to stop investing in the fixed-price contract, but I am really, really upset as to how they got into this position in the first place and how they screwed up," said institutional investor David Taylor of Taylor Asset Management, which holds an undisclosed number of shares in the company.
"So it's like thanks very much for not punching me anymore, I appreciate it, feel so much better, but I'd love to know why they punched me in the first place."
Laurentian Bank Securities analyst Nauman Satti said changes to operational disclosures, impairment charges and a lack of clarity on the extent of problems within the resources segment had contributed towards the stock price decline.
In the first major restructuring under interim Chief Executive Officer Ian Edwards, SNC said it would split into two reporting units - one focussed on growth areas and the other housing its underperforming resources and infrastructure construction businesses.
SNC also said it would explore options of its resources unit, and warned on profit, citing higher project costs.
"Edwards faces the daunting task of righting the SNC ship at a time when legal uncertainty prevails, political posturing is still hurting the business, project execution risks remain high and employee morale is anything but," Raymond James analyst Frederic Bastien said.
SNC is facing a trial in Canada over fraud and corruption charges. The company's unsuccessful attempts to reach a settlement led to a scandal engulfing Prime Minister Justin Trudeau.
"I assume he (Edwards) is very strong on the operational side, but it takes a lot more when you are the CEO ... I am not certain he is the right guy for the job," Taylor said.
SNC's shares, which have lost 50% of their value this year, were down 9% at C$21.67.
AltaCorp Capital analysts expect more predictable earnings from exiting the fixed-price contracts to likely materialise only from 2020.
SNC declined to comment on the analysts' reports, saying the reorganization was the first step of the company's new strategic direction.
(Reporting by Debroop Roy and Arathy S Nair in Bengaluru; Editing by Anil D'Silva and Sriraj Kalluvila)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.