Stantec Remains Cautious Despite Solid 2014

Stantec Inc. (TSE:STN, Mkt cap 3.00B, P/E 18.53, Div/yield 0.10/1.32, EPS 1.72, Shares 93.84M) has announced solid results for 2014, but was quick to caution that shifting market conditions might paint a slightly different picture in 2015, with the continuing impact of lower oil prices expected to affect revenue.

As the Edmonton Journal reports, net income climbed 12.5% year-over-year to $164.5 million, with gross revenue up 13.1% to $2.53 billion. Diluted earnings per share increased 10.8% to $1.74.

Stantec president and CEO Bob Gomes credits the double-digit growth to the firm’s “diversified business model” and “consistent, disciplined strategy”, which have meant it was able to push on in the face of fluctuating market conditions.

A contraction in the engineering giant’s business related to the energy sector was offset by growth in its building and infrastructure business operating units.

For the 12 months ended December 31, 2014, Stantec’s oil and gas business enjoyed 2.9% growth, but things took a predictable turn in the final quarter, shrinking by 6.6% compared to the same period in 2013.

This prompted the Edmonton-based company into cutting around 300 jobs, with more jobs likely to be lost in the coming months, Gomes said.

“That is always a hard thing to do when you’re just a people business,” he stressed. “We understand, and I think our staff understand, that that is one of the ramifications of the oil and gas business.”

Stantec, which currently has more than 15,000 employees in more than 250 locations, expects overall 2015 gross organic revenue growth — excluding growth through acquisitions — to come in at around the 3% mark. But its Canadian business may see growth of 2% or less, with fewer big projects likely to get off the ground.

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