The announcement Friday came alongside earnings that fell short of analysts' expectations as the engineering giant lost
"The legacy resources projects business and associated lump-sum turnkey projects will be largely wound down and the projects complete by the end of 2020,"
The company forecasts the business will be profitable next year.
The move, which wraps up a strategic review launched by CEO
The turn away from resources will reduce that segment's operations to nine countries from 30 and cut its headcount to 8,000 from 15,000 by the end of the year, with 2,000 more departures expected by 2021, SNC said.
The resources division continued to drag on profitability last quarter. Its so-called lump-sum turnkey projects — fixed-price contracts under which companies have to eat any cost overruns — accounted for 78 per cent of the company's
Edwards pledged a year ago to retreat from fixed-price projects, with one resources contract completed last quarter and the vast majority of work on the four remaining ones on track for completion by the end of 2020 — "a key milestone in terms of de-risking the business,"
"Bottom line, while we acknowledge that SNC's (second-quarter) results were below expectations, we note that the miss was related to lump-sum turnkey projects which management is in the progress of exiting," Poirier said.
SNC announced the restructure as it reported a net loss of
The adjusted loss improved to
Revenues decreased 14.5 per cent to
The company was expected to report
"SNC’s challenges have escalated on the back of COVID," said
Edwards cited the economic downturn prompted by the pandemic — which halted construction and resources projects around the globe — as well as a downturn in oil prices as evidence that its pivot toward core engineering services was the right move.
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