SNC-Lavalin changes its name to AtkinsRéalis. After ten turbulent years, the Montreal engineering firm wants to demonstrate that it has reached a “turning point,” explains its president and general manager, Ian Edwards, in an interview.
The company wants a makeover after a decade marked by ethical issues and the poor performance of its activities, notably an ill-advised acquisition in the oil sector and cost overruns on turnkey contracts. The name change is also an opportunity to give a feeling of common belonging to all employees who work for the company’s different subsidiaries, explains Mr. Edward.
The executive says SNC-Lavalin’s turnaround is bearing fruit and the company is in a good position for growth, during an interview at the company’s headquarters.
Stop what no longer works
“When I arrived in office, I was very transparent,” he says. We said one part of the business was doing really well and another part wasn’t. Our strategy is simple. We stop doing what no longer works and we do what works really well. »
The company sold its unprofitable oil operations in 2021, for a fraction of what it paid in 2014.
Also, the firm has no longer bid on turnkey contracts since 2019, because these projects often experience cost overruns. In the meantime, the remaining contracts still showed cost overruns, but management no longer expects any unpleasant surprises now that they are almost all completed.
“When we reached the point where we believed that all these problems were behind us, it was in the fourth quarter,” assures the manager. From this point on, it’s time for growth. »
A complicated climb
This hoped-for turning point could mark the end of a long purgatory for SNC-Lavalin investors. The stock has shown a good recovery since the start of the year, but it remains at thresholds comparable to those of 2012, when the first cases of embezzlement were revealed. The value of its rival WSP has multiplied by almost 6.7 since this period.
Note that the share symbol on the Toronto Stock Exchange will also be changed, from “SNC” to “ATRL”. The modification is planned for the session of Monday, September 18.
Doubts persist in the financial community about the hope that this new momentum will not be hampered by other unpleasant surprises while the performance of SNC-Lavalin has been inconsistent over the years, comments analyst Maxim Sytchev, of Financière National Bank. He emphasizes that this perception hides the fact that the company nevertheless has a completely new management and board of directors.
To achieve its goals, AtkinsRéalis will have to demonstrate that it is able to post profit margins comparable to its competitors and that it is capable of generating cash flow consistently.
“While we believe it is possible to improve margins, it is far from an easy task to accomplish,” warns the financial analyst.
Acquisitions in the United States
If things go as planned, AtkinsRéalis will be ready to make acquisitions from 2024. This strategy fuels both hopes and concerns among investors, who remember the mistakes of the past. “It is better for the company not to rush into a transaction,” warns Mr. Sytchev.
The firm does not intend to take too big bites, replies Ian Edwards. He mentions the possibility of two small acquisitions in 2024. “We are going to take it step by step. We won’t do big deals. »
The main objective of the strategy will be to expand the geographic footprint of AtkinsRéalis in the United States. “We need to make acquisitions the most in the United States. […] We have a lot of success in the United States, but only in a small number of states in the South. »
A French and Montreal name
If SNC-Lavalin chooses to include the name of its British subsidiary Atkins in its name, it also includes “Réalis” in its company name. This refers to carrying out projects, explains the manager.
With an acute accent, this portion of the company name is also a “clear” allusion to the Montreal and French-speaking identity of the firm, assures Mr. Edwards. Originally from the United Kingdom, Mr. Edwards canceled a speech only in English in 2021, in the wake of controversies surrounding the presence of unilingual English-speaking bosses in several Montreal companies.
In the past, commentators have expressed concern that the power of SNC-Lavalin’s headquarters and Montreal heritage would be diluted. When asked if the change of identity could mark a break with the firm’s Montreal history, Mr. Edwards smiles.
“We put Realis on to make it clear that this company is based in Montreal and that it is a Quebec company. We bought Atkins. It’s not the other way around. We plan to stay here. We hope that the inclusion of Realis in the company name will alleviate these fears. »