MONTREAL — WSP Global Inc. saw profits fall by 77 per cent last quarter amid "extreme market volatility" triggered by the COVID-19 crisis.
Net income dropped to $14.3 million in the first quarter compared with $62 million a year earlier, as net financing expenses shot up more than 600 per cent, the company said.
"Net earnings have been significantly impacted by the extreme volatility observed in the main market indexes and in foreign exchange rates mainly resulting from the COVID-19 pandemic," WSP said in quarterly filings.
The engineering firm sought to reassure investors with the release of financial results Wednesday, three weeks after it withdrew its 2020 guidance due to "unprecedented uncertainty" prompted by the pandemic.
"In most of WSP's major hubs, many of the services or projects are considered as essential services and the corporation has, to date, maintained good productivity levels and our clients have thus far generally remained committed to their projects, particularly in the public sector," the company said.
Public sector projects accounted for 56 per cent of revenues last year, leaving the firm relatively stable during the crisis with most staff working remotely.
WSP is "in a good spot," said analyst Frederic Bastien of Raymond James.
"WSP Global has been one the best performing stocks across our coverage universe since the markets began rolling over on Feb. 24," he said in a research note last week. Its share price has slipped one per cent since that date, versus a 12 per cent drop for the S&P 500 index.
About four per cent of the company's business stems from oil, one of the lowest resource exposure levels in the engineering industry, Bastien said.
"No engineering consultancy will exit the COVID-19 crisis unscathed, to be clear."
The Montreal-based company has seen several projects delayed and has postponed some capital expenditures as lockdowns snarl construction activity across the globe.
CEO Alexandre L’Heureux said his goal throughout 2020 is to keep adjusted earnings at a level comparable to last year's, excluding non-recurring expenses.
"Our April results are better than we had expected going into the month," he said in a release.
At the end of March, WSP had $1.2 billion of available short-term capital — more than $900 million of it in cash.
On a per share basis, diluted net earnings decreased to 13 cents from 61 cents, far below the 63 cents per share expected by analysts, according to financial markets data firm Refinitiv.
WSP says revenues edged up by 1.7 per cent year over year to reach $2.2 billion in the quarter ended March 28.
This story by The Canadian Press was first published May 6, 2020.
Companies in this story: (TSX:WSP)
Christopher Reynolds, The Canadian Press
