AtkinsRéalis saw a thriving nuclear business in its latest quarter, as the engineering company looks to build on a gradual global transition away from fossil fuels.
The company, formerly known as SNC-Lavalin, reported organic revenue growth of 21% year-on-year in its nuclear sector, while its nuclear order backlog increased 87% to 1.8 billion.
The larger order backlog mainly came from activities related to Candu Énergie, a subsidiary of AtkinsRéalis, over the past year.
President and CEO Ian Edwards highlighted the Ontario government’s plan to build a new nuclear power plant at Bruce Power on the shores of Lake Huron, in addition to the ongoing refurbishment of the plant Darlington nuclear power plant in the Toronto area.
“We are actively working on extending the life of Candu at Darlington and Bruce Power,” Mr. Edwards said on a conference call with analysts to discuss the company’s first-quarter results Wednesday.
“And we continue to see growth opportunities in Ontario as the government recently announced a program to refurbish the Pickering nuclear power plant. »
With initial work already underway, this project aims to extend the life of the Pickering generating station by 30 years and meet an expected increase in the province’s electricity demand, explained the CEO.
In November, the company announced that a consortium led by Candu had won a 750 million engineering and procurement contract to extend the life of Romania’s Cernavoda nuclear power plant.
For 2024, Atkins now forecasts organic nuclear revenue growth of between 15 and 20 percent, up from prior growth expectations of 12 to 15 percent.
The company sees nuclear power as part of a broader transition to more sustainable energy production that it hopes to capture across the world.
“Australia, for example, like most countries, is moving towards energy transition works – that would be transmission-distribution works, pumps, hydro storage, hydro projects,” Mr Edwards said , specifying that AtkinsRéalis was bidding for work in this country.
“Australia’s history is more about transportation; Australia’s future is about energy transition,” he argued.
Transport, cornerstone
Nonetheless, transportation infrastructure remains the cornerstone of the business, as governments seek to repair and rebuild aging roads, railways and bridges, particularly in the United States.
Mr. Edwards highlighted order backlog growth fueled by the Georgia Department of Transportation as well as the management of the design and construction of rail signaling in the United Kingdom during the last quarter.
“We maintain close relationships with several departments of transportation across the United States and are methodically increasing our presence in high-growth city centers,” he said.
On Wednesday, the company reported that first-quarter engineering services revenue increased 17% year-over-year to $1.7 billion.
AtkinsRéalis’ net profit attributable to shareholders jumped 60% to 45.5 million, while total revenue rose 12% to 2.26 billion in the quarter ended March 31 from the same period a year earlier.
Turnkey projects
The Montreal company lost $13 million in earnings before interest and taxes on so-called lump sum turnkey projects, fixed-price contracts under which companies must foot the bill for cost overruns.
The total represents a larger loss than the 9.2 million the previous year, but less than in previous years.
Three of these contracts at AtkinsRéalis continue to pose problems as Mr. Edwards seeks a possible exit from the market: the Eglinton Crosstown light rail system in Toronto, the Trillium line in Ottawa and the extension of the Réseau express métropolitain ( REM) in Montreal.
Although the first two are largely complete after years of delays and mounting budgets, they have not yet been opened to the public due to ongoing commissioning and testing.
Atkins’ backlog on lump sum projects declined 42% year over year to $299 million in the first quarter, primarily due to progress on REM, Edwards said.
He also reiterated AtkinsRéalis’ plan to sell its stake in Linxon, the joint venture with Hitachi Energy.
“Frankly, I think it will take time to find the right partner,” he said. We must demonstrate performance in the sector. »
The company, which focuses on electricity substations, made a profit before interest and tax of 1.8 million last quarter.
Meanwhile, AtkinsRéalis’ Capital segment’s adjusted profit fell 91% year-over-year to $1.1 million due to a lack of dividends from its 7% stake in the 407 toll highway near Toronto. .
On an adjusted basis, diluted net income attributable to shareholders from professional services and project management rose 31% to 42 cents per share, about on par with analyst expectations, according to LSEG Data & Analytics .