Problems keep piling up for Canadian chems engineer SNC - analysts

Source: ICIS News

2019/03/26

TORONTO (ICIS)--Problems at Canadian chemicals and energy engineering services provider SNC-Lavalin just “keep piling” up, analysts said on Tuesday after a cancellation of a big contract for sulphuric acid plants in Chile.

The contract cancellation by Chilean copper mining major Codelco comes as SNC remains at the centre of a political scandal in Canada.

The office of Prime Minister Justin Trudeau allegedly sought to prevent a criminal prosecution of the Montreal-based engineering major for alleged bribery.

Colin Cieszynski, market strategist at investment firm SIA Wealth Management, said it was highly unusual for a chemicals engineer to engage in a public dispute with a major a client. Other analysts agreed.

Clients may now wonder whether they should hire SNC for future projects, the analysts said on Canadian business television network BNN on Tuesday.

“It seems to me like the problems are just piling up and piling up, which is something that happens when things start to go off the rails,” said Cieszynski.

Given SNC’s current troubles, the analyst advised long-term investors to stay away from the company's shares at this time.

Meanwhile, the political scandal will continue to hang over SNC as the opposition Conservatives will use it against Trudeau until federal elections are held in October, the analysts said.