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WSP Global beats analysts' expectations in the second quarter

Last updated: 05:08 06 Aug 2015 AEST, First published: 03:08 06 Aug 2015 AEST

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Recently, National Bank analyst Leon Aghazarian has reiterated a Buy recommendation, setting a C$50 price target fo WSP Global

 

Shares of Montreal based WSP Global (TSE:WSP), a consulting engineering firm, were trading between 0.10-0.5% higher today, but approaching its 52 week high of C$45.50, after it beat  analysts' expectations in the second quarter.

In the quarter, which ended June 27, WSP, formerly known as Genivar, posted earnings of C$0.51 per share, marking an 18.6% over the same period of 2014. Analysts surveyed by Bloomberg had forecast earnings per share of C$0.49.

"These results clearly demonstrate the depth of our employees' technical expertise, as underscored by recent wins such as the Pacific Highway upgrade project in Australia or the California High-Speed Rail project. By maintaining a clear focus on technical excellence, we will be recognized as the go-to firm in all of our operating sectors," said WSP’s chief executive officer, Pierre Shoiry.

Shoiry also promised that the company would focus “on driving organic growth, leveraging our global know-how and identifying opportunities to acquire professional services firms with complementary expertise”.

Revenues, meanwhile, were up 148% to $ 1.5 billion primarily due to recent acquisitions while the consulting engineering firm recorded organic growth of 5%.

WSP’s backlog stands at C$4.5 billion and represents some 9.5 months of revenues; it has remained stable compared to Q1 2015.

The company’s growth has focused on Scandinavia and in during the second quarter, WSP acquired FLK Sverige AB, a 50-employee Swedish firm specialized in mechanical engineering and Vicicom AB ("Vicicom"), a 35-employee firm specialized in the development of broadband and telecommunications networks for municipalities and operators, also based in Sweden.

In July, WSP acquired Faveo Group, a Norwegian project management firm, offering specialized services in the areas of infrastructure and energy, has 400 employees.

WSP’s Faveo acquisition is strategic, even if it is not expected to boost revenues significantly, because it gives the Montreal firm access to the growing Norwegian market even as it strengthens its position in Sweden.

Norway and Sweden are planning large investments in roads and transport infrastructure. In particular, Norway wants to increase the number of ports and add to marine infrastructure, attracting interest from Chinese consulting and construction companies, well aware of growing opportunities in the Scandinavian country.

Recently, National Bank analyst Leon Aghazarian has reiterated a Buy recommendation, setting a C$50 price target fo WSP Global, noting that the company is well on its way to achieve its goal of 5,000 employees by 2018.

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