August 13, 2012

SNC-Lavalin to provide district cooling system in Mecca

SNC-Lavalin Inc. will provide a district cooling system in the Saudi city of Mecca, site of an annual Islamic pilgrimage that attracts Muslims from around the world, under a $92-million contract announced Tuesday.

The Montreal-based company, which provides engineering and project management services around the world, says construction is set to begin this quarter under a contract from a subsidiary of Saudi Tabreed District Cooling Co.

The first phase of the project, a chilled water production plant for the Jebel Omar Development, is planned for December 2013.

“We are delighted with receiving this contract, particularly because it is the third district cooling plant contract awarded to us in Saudi Arabia since May 2010,” said SNC executive vice-president Charles Chebl.

“This contract reflects our strategy of bringing the full spectrum of our global expertise to the region, and attests to SNC-Lavalin’s world-class leadership in the district cooling sector.”

Last week, SNC lowered its earnings forecast for 2012 due to higher forecast costs at two fixed-price projects, one in the company’s power segment and the other in its hydrocarbons and chemicals segment. Full-year net income is now expected to be in a range of $325 million to $340 million.

During the latest quarter, its net income fell to $32.7 million or 21 cents per share in the three months ended June 30. That’s down from $104.8 million or 67 cents per share a year earlier.

It has been a tough year for SNC-Lavalin, which is grappling with a financial scandal, a labour dispute at its Candu nuclear energy division and a worsening global economic outlook that has put pressure on capital spending plans.

It also faces a Canadian class-action attempt on behalf of shareholders. Two firms that began suits in May announced on Friday that they’ve received court permission to combine the claims on behalf of investors who bought SNC shares between Feb. 1, 2007 and Nov. 5, 2009.

The suit, which is seeking class-action status, demands compensation for a decline in SNC’s stock price.

News from © Canadian Press Enterprises Inc., 2012

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