Photo: The Canadian Press
The WSP Global Inc. logo is seen in this undated photo. WSP Global Inc. said it was abandoning its projects in Russia and will no longer continue work in the country and in Belarus following its invasion of Ukraine and the economic sanctions that were imposed. THE CANADIAN PRESS/HO, WSP Global Inc. *MANDATORY CREDIT*
WSP Global Inc. is abandoning plans in Russia and will stop seeking work there or in Belarus following the invasion of Ukraine and subsequent economic sanctions, the engineering firm said Thursday.
“Although we have a limited number of ongoing engagements involving projects in Russia, we have decided to end these engagements, for which we have non-material exposure,” CEO Alexandre L’Heureux told analysts, saying the company was “deeply troubled”. by conflict.”
“Furthermore, we will no longer pursue any other missions in Russia.”
WSP has no employees or offices in Russia, Belarus or Ukraine, he said. Its economic exposure is expected to be less than $1 million.
The Montreal-based company joins a growing list of Canadian companies that are leaving Russia or suspending their plans, sales or operations there, including auto parts maker Magna International Inc., Kinross Gold Corp., McCain Foods Ltd. and Canada Goose.
The decision came as WSP reported an 84% year-over-year profit increase in its fourth quarter and unveiled a three-year strategic plan. The plan, which is part of a longer-term vision to double in size, aims to increase net revenues by more than 30% and adjusted profits by 40% by 2024.
Once a boutique company called Genivar, the 63-year-old company grew from 31,700 to 55,000 employees at the end of 2014. It eclipsed SNC-Lavalin Group Inc.’s workforce of around 31,000, down from 50,000 employed fewer than three a few years ago as SNC transformed into a pure-play engineering company.
WSP’s market value stood at $19.7 billion as of Thursday afternoon, compared to $5.6 billion for its competitor.
L’Heureux said he hopes to leverage the talent and scale acquired through recent acquisitions – 14 since 2019, including environmental consultancy Golder, which has 7,000 employees last year – to increase price and efficiency.
“Our margin profile for improvement is not cost reduction,” he said. “We are able to charge more for our services.”
Over the next three years, WSP aims to increase its presence in several of its key segments, including environment. It also hopes to boost its businesses in the power, energy, water and industrials sectors while slightly reducing exposure to transportation.
The company further plans to increase “front-end” strategic advisory and consulting work, which typically offers higher margins, and reduce engineering and design services to around 50% exposure from the 55 current %.
Eventually, it hopes to expand its “clean revenue” to more than half of its business as it seeks to nab low-emission projects.
WSP landed several large contracts last quarter, which helped grow its backlog organically by 10% year-over-year to $10.4 billion.
One, called Clean Path New York, is for a planned 288-kilometer transmission line for that state that will supply emissions-free power to New York and stretch from a substation on the East River to the mountains. Catskill.
The other, dubbed Firmina, is a project to complete the licensing of a 14,000 kilometer fiber optic cable to be built by Google that will run under the sea from the east coast of the United States to Argentina.
“WSP Global again showed yesterday why it deserves a higher valuation. The engineering consultancy significantly exceeded consensus expectations for 4Q21, offered a positive outlook for 2022 and set bold long-term ambitions to double in size and achieve adjusted (earnings) margins above 20 percent,” wrote analyst Frederic Bastien of Raymond James in a note to investors.
The company reported earnings attributable to shareholders of $136.7 million or $1.08 per share for the quarter ended Dec. 31, compared with earnings of $68.9 million or 61 cents per share a year earlier. .
The company’s fourth-quarter revenue totaled $2.89 billion, up 29% from $2.25 billion in the last three months of 2020.
On an adjusted basis, WSP said it earned $1.46 per share, up from adjusted earnings of 82 cents per share a year earlier and beating analyst expectations of $1.31 per share by 12%. , according to market data firm Refinitiv.