S&P lowers SNC-Lavalin

S&P said it revised the outlook on SNC-Lavalin Group Inc. to negative from stable and affirmed its long-term issuer credit rating at BBB.

SNC-Lavalin recently announced that its 2018 earnings and cash flow will be materially weaker than previous guidance, the agency explained.

S&P said it now expects the company's adjusted debt-to-EBITDA ratio will exceed 3x in 2019.

There is also uncertainty regarding the company's ability to improve leverage to levels commensurate with the rating in 2020, the agency added.

Cost overruns on a problematic engineering and procurement contract within its metals and mining business awarded in 2016 are primarily responsible for the expected shortfall in earnings and cash flow, S&P said.

The company is expected to see weaker earnings from its oil and gas and metals and mining segments, resulting in lower free cash flow and higher debt levels than previously expected, the agency said.

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