WSP Global overtakes SNC-Lavalin as Canada's largest engineering firm
WSP Global Inc. (WSP.TO) is embarking on a three-year growth plan, but the head of the company said he’s not interested in acquiring beleaguered SNC-Lavalin Group Inc., another Quebec-based engineering firm, as part of that strategy.
Shares of SNC (SNC.TO) plummeted last month and are now trading at their lowest level since mid-2012, after the company revised earnings expectations amid issues with a mining contract and headwinds resulting from souring Saudi-Canadian relations. It was the latest setback for SNC, which is still struggling with the fallout from a past corruption scandal.
When asked if WSP feels pressure to come to SNC’s rescue, the company's president and CEO Alexandre L’Heureux said it would be a bad idea.
“SNC and WSP, we really operate in very different markets – they are an integrarted model. They do construction, we don’t. They are in the oil and gas sector, we [aren’t],” said L’Heureux in an interview with BNN Bloomberg’s Paul Bagnell Thursday. “Our largest competitors are outside Canada, frankly.”
“As for a takeover of SNC, that’s not in the plan,” he said. “We have two different strategies. I think that would be bad news for Canada, frankly, if we were to eliminate a head office.”
Montreal-based WSP recently surpassed SNC in market capitalization – currently about US$7.1 billion and US$6.6 billion, respectfully – fuelled by the company’s plan for double-digit revenue growth over the next three years.
“WSP is a story of growth,” L’Heureux said, noting the company began its international expansion in 2012.
Today, the company generates 18 per cent of its revenue in Canada, down from 99.9 per cent in June 2012, L’Heureux said.
He added that what sets WSP apart from competitors is its focus on developed countries, as opposed to emerging economies like Saudi Arabia, which has caused problems for firms like SNC.
L’Heureux said the company is looking to grow its headcount by 35 per cent to 65,000 from 48,000, and increase EBITDA (earnings before interest, taxes, depreciation and amortization) by 50 per cent to $9 billion by 2021.
“We’re entering the year feeling good about our markets, where we operate,” he said.