MONTREAL, May 22, 2013 /CNW Telbec/ - In its annual review today, Standard & Poor's (S&P) lowered SNC-Lavalin's (TSX: SNC) credit rating one notch to BBB with a negative outlook, while retaining the Company's investment grade status.
The other institution with which the Company has a credit rating, DBRS, also continues to rate SNC-Lavalin at investment grade. It is unusual for a company in the engineering and construction sector to achieve investment grade status.
S&P cited its concern about weakened profitability and high administrative costs. The Company's rating status was supported by a range of strengths, including the fact that SNC-Lavalin:
- Is "Canada's largest engineering firm"
- Has "intermediate financial risk" with "low company-level debt and ample financial flexibility"
- Has a debt maturity profile that is "favourable, with no significant debt maturities in the medium term"
- Is able to "derive additional financial flexibility and liquidity from monetizing part of its ICIs"
- Has an ICI portfolio that has "begun generating" what S&P believes are "highly stable cash flows," and has "fair values it estimates to be significantly higher than reported book value"
- Has "very prudent financial risk management"
- Has "sectoral and geographic diversity"
As noted recently by President and CEO, Robert G. Card, at SNC-Lavalin's Annual General Meeting of Shareholders, the Company is not satisfied with its current level of profitability. The Company is focused on improving project execution and risk management so that these issues are properly managed going forward.
"Retaining strong financial stability is important for the firm, and we are committed to operating in a fiscally conservative fashion as we complete our near-term actions leading to ethics and operational excellence," said Robert G. Card.
SNC-Lavalin is one of the leading engineering and construction groups in the world and a major player in the ownership of infrastructure, and in the provision of operations and maintenance services. Founded in 1911, SNC-Lavalin has offices across Canada and in over 40 other countries around the world, and is currently working in some 100 countries. www.snclavalin.com