SNC-Lavalin Group Inc. announced that it is exiting lump-sum turnkey (LSTK) contracting and will reorganize the Company’s Resources (Oil & Gas and Mining & Metallurgy) and Infrastructure Construction segments into a separate business line following continued poor performance of these segments and will focus on engineering services which are considered as a high-performing and growth area of the Company. The Company is also exploring all options for its Resources segment, particularly its Oil & Gas (O&G) business, including transition to a services-based business or divestiture.

The exit from lump-sum turnkey (LSTK) contracting means that  SNC-Lavalin Group Inc. is exiting from the procurement process for major P3 projects. The company will be withdrawing its bids for CAD 2.8 billion (USA 2.1 billion) SkyTrain Broadway Extension project and CAD 1.4 billion (USA 1 billion) Pattullo Bridge replacement project. SNC-Lavalin Group Inc. was shortlisted and went to RFP stage in both projects. 

The decision to reorganize the Company will allow SNC-Lavalin to focus on the high-performing and growth areas of the business, which will be reported under SNCL Engineering Services. The Company will fulfill the contractual obligations of its current LSTK projects, including full commitment to the Réseau express métropolitain (REM) and be reorganized as SNCL Projects, while providing separate ongoing operational and financial disclosure to the market on this business line. 

The reorganization and exiting from LSTK contracting is the first step of the new strategic direction for the Company that is focused on de-risking the business and generating more consistent earnings and cash flow. Together with the recently announced sale of 10.01% of Highway 407 ETR for US$ 3 billion, the Company’s goal is to strengthen the balance sheet and enhance financial flexibility, while removing volatility. SNC-Lavalin will provide further detail on the strategy and host an investor day in early fall.