Canam sees less competition amid lower loonie, oilpatch slowdown
Profits surge 28% to $13.8 million on record sales as a result of growing demand for bridge and building construction in 2014.
MONTREAL — Structural steel fabricator Canam Group is facing less competition from foreign firms in Canada as the lower loonie, decreased energy activity and the US economic recovery prompts American rivals to chase opportunities closer to home.
“These three things make the Canadian market less attractive to others and we ourselves have done OK,” CEO Marc Dutil said Feb. 26 after releasing the company’s strongest fourth-quarter results in seven years.
The Quebec-based company’s profits surged 28% to $13.8 million on record sales as a result of growing demand for bridge and building construction.
Sales increased 36% to $383.6 million, mainly due to increased demand for joists and steel decks along with heavy and light structural steel.
The company had been expected to earn 32 cents per share on $342.4 million of sales, according to analysts polled by Thomson Reuters.
Higher activity prompted the company to recall laid off workers, adding 350 jobs throughout its operations. It currently has about 3,900 employees.
Dutil said Alberta remains under pressure but is still busy and Ontario is slowly improving.
But it is the economic recovery in the United States, where Canam gets 80% of its revenue, that is driving most new business with the company’s order backlog having soaring 70% in one year to more than $1 billion.
Canam has provided steel to several new US sports stadiums and expects more opportunities from professional soccer, hockey and football. It is also looking at other projects that including airports, convention centres and distribution centres.
For all of 2014, profits fell 6% to $29.3 million despite higher sales, mainly because of severe winter conditions in northeastern North America in the first quarter.
Cold temperatures are less of a challenge this winter and should delay large projects by only a day or two, Dutil said.
Sara O’Brien of RBC Capital Markets expects higher margins from Canam’s increased backlog will drive double-digit EPS growth in 2015 and 2016.
© 2015 The Canadian Press