“We’ve become
more efficient,
agile and client

President's message

Delivering on
our commitments

In 2016, we proudly delivered on several key commitments. This included further reducing our operating costs, simplifying our structure and generating good returns despite challenging market conditions. We’ve become more efficient, agile and client focused. We’re also better equipped than ever to consistently provide industry-leading global expertise locally and excellent end-to-end project delivery.

Strong, consistent financial performance

I’m pleased to report that, for the second year in a row, our skilled and dedicated employees have produced strong financial results in line with our 2016 guidance.

In 2016, our net income attributable to SNC-Lavalin shareholders reached $255.5 million, or $1.70 per diluted share, compared to $404.3 million in 2015, while our adjusted net income from engineering and construction (E&C)1 grew by 12% to $226.4 million, or $1.51 per diluted share, compared to 2015. We maintained a solid balance sheet with cash and cash equivalents of $1.1 billion and a stable diversified revenue backlog of $10.7 billion at year-end.

We also returned approximately $156 million to shareholders through dividends. In March 2017, our long-term outlook, cash position and diversified revenue backlog enabled us to raise our quarterly dividend by 5% and sustain a 16-year trend of increases.

Key achievements in 2016

I would like to thank all SNC-Lavalin leaders and employees for their rigour and the progress we made in 2016. These accomplishments have laid the foundation for us to achieve our 2017 targets.

Streamlined structure

Early in 2016, we launched Operational Excellence to improve the way we work, further align our activities with our core business strategy and help us build even closer relationships with our clients. Reviewing our activities through this lens led us to divest our non-core Canadian real estate facilities management business and our underperforming operations in France and Monaco.

We also completed our IT outsourcing partnership with CGI. This partnership should reduce our annual IT operating costs by an average of 20%, allowing us to reinvest to boost our competitiveness and concentrate on delivering for our clients.

Focus on delivery

Last year, we improved execution on projects of all sizes, scopes and degrees of complexity. These improvements will help us more consistently meet or exceed client expectations, win repeat business and sustain a healthy backlog.

In March 2016, we launched our new Diversity & Inclusion Program to strengthen our talent pool. It sets a goal of increasing the number of women in engineering and management positions from our 13% to 20% by 2018. We also joined the 30% Club, a global organization dedicated to promoting a better gender balance at board and senior management levels.

A more performance-driven culture

Today’s leading organizations always measure up against the best in ethics and compliance. In 2016, we pursued this goal by continuing to resolve issues of the past. We announced our participation in the Voluntary Reimbursement Program to reach a settlement with the Government of Quebec and the province’s public agencies. We also reached a settlement agreement with the Ordre des ingénieurs du Québec and with the Commissioner of Canada Elections.

1 The terms “Adjusted net income from E&C”, “Adjusted diluted EPS from E&C” and “Segment EBIT” do not have any standardized meaning under IFRS. Therefore, they may not be comparable to similar measures presented by other issuers. Management uses these measures as a more meaningful way to compare our financial performance from period to period. Management believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our company’s performance. A reconciliation of these non-IFRS performance measures can be found in our 2016 Management’s Discussion and Analysis.

Growth in four strategic sectors

For the first time in four years, our Infrastructure & Construction business generated a positive Segment EBIT1 margin. Among the accomplishments, we successfully delivered the Growing Up Healthy project at CHU Sainte-Justine, North America’s second largest pediatric centre. We were also shortlisted on several major projects, four of which have a combined potential value of over $10 billion.

Our Nuclear team performed well too. We started 2016 with a $2.75 billion joint-venture contract to execute the Darlington nuclear power station retube and feeder replacement project. We secured a multi-year contract for initial engineering and tooling to refurbish Bruce Power, the world’s largest operating nuclear facility and source of 30% of Ontario’s energy. And we won a pre-project contract from Nucleoeléctrica Argentina for a CANDU nuclear new-build project.

In addition, we signed an agreement in principle for a joint venture with China National Nuclear Corporation and Shanghai Electric. Together we’ll explore opportunities for our proprietary CANDU nuclear technology within China, the world’s largest nuclear market, as well as in other parts of the globe.

In Oil & Gas, we welcomed Martin Adler as the sector’s new president following Christian Brown’s appointment to the new position of corporate development officer. Among the several projects won were an $800-million contract in the Middle East and a 10-year service contract worth approximately US$100 million with Crestwood Equity Partners in the United States.

In Mining & Metallurgy, we were awarded a number of contracts with new clients and in new geographies. This includes the Norilsk Nickel project in Russia, one of world’s largest dioxide mitigation projects, and two engineering, procurement and construction projects in Chile.

Our priorities in 2017

In 2017, we’ll continue to build on our strong foundation and 2016 achievements, focusing on what we can control to meet client needs, improve our business and adapt to constantly evolving markets. We’ll also seek to more fully leverage our diversified business model, broad capabilities, end-to-end solutions and leadership positions in highly attractive sectors. These include infrastructure and P3s in Canada, rail and transit, nuclear energy and sustaining capital services across our four sectors.

Four strategic priorities or commitments will guide our efforts throughout 2017. We’ll continue our progress in Operational Excellence, driving improvements in every area. This year, several new initiatives should help us enhance our efficiency, delivery, competitiveness and, ultimately, shareholder returns.

Our growth depends on our clients and how well we service them. That’s why we’re determined to become a more client centric organization, our second priority in 2017. By consistently delivering excellent work, we’ll ensure our clients’ satisfaction and repeat business.

Thirdly, we’ll continue building a performance-driven culture that inspires people to go beyond contract expectations or business as usual and to improve every day. We’re currently soliciting our employees’ feedback on how to promote a culture that better fosters innovation, creativity and teamwork.

Finally, we’ll remain focused on growing our business organically and through acquisitions. Organic growth will be largely driven by our Infrastructure sector in Canada and our nuclear, renewable energy and sustaining capital services across all four sectors.

Making good on these commitments is essential to our success as a global Canadian E&C champion that generates a consistently strong financial, ethical and HSSE performance with world-class execution at top-tier margins. With our employees, clients, partners and shareholders’ valued support, we’ll continue striving to build what matters in an ever-changing world and to always deliver as promised.


Neil Bruce
President and Chief Executive Officer