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News Release |
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Margin growth and strong demand for domestic construction services expected to drive Aecon's earnings growth
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EPS expected to grow to $0.75 by 2008 |
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Toronto, Ontario – June 20, 2006: Aecon Group Inc. (TSX: ARE) today announced that it has set a target of achieving $0.75 earnings per share in fiscal 2008. John M. Beck, Aecon's Chairman and CEO and Scott Balfour, Aecon's President and CFO made the announcement today at the Company's Annual General Meeting in Toronto. Mr. Beck and Mr. Balfour told the meeting that the substantial earnings improvement Aecon is targeting over the next two years is expected to come largely from margin enhancement, a trend that has already started to take hold. Year-over-year, backlog margins at the end of the first quarter increased by 40 percent from 7.2 percent in 2005 to 10.2 percent in 2006. For the current fiscal year, management said Aecon is expecting stable top line revenue in the range of $1.1 billion along with improved segment profitability to result in overall profitability generally in line with published analyst estimates. For 2007, management is targeting a modest expansion of Aecon's top line revenue and a continuation of the margin gains expected in 2006 to result in accelerated profit growth at least in line with analyst estimates. “For 2008, which is at the outer range of our planning perspective, we are expecting further modest growth of the top line and have set for ourselves the ambitious, but we believe achievable, target of delivering earnings per share of 75 cents,” said Mr. Beck. “The domestic market for construction services in Canada is likely the strongest that it has been in nearly 15 years, and there is every expectation this demand is going to see us through to at least the end of this decade,” noted Scott Balfour. Management cautioned that these are internal planning estimates and that there are a great many factors that will impact the translation of these estimates into actual results. In particular, it was noted that the near term planning estimates might be impacted by the realization of settlement negotiations on two large legacy hydro projects – the Nathpa Jhakri project in India and the Eastmain project in northern Quebec. It was also noted however, that these planning estimates exclude the realization of any gain on the investment that Aecon has made in the Cross Israel Highway. “During the next twelve to eighteen months, even as we continue to earn revenue from work on an expansion of this highway, we expect to monetize a portion of our investment in the project thereby starting the process of realizing for our shareholders the value that has been created through our development and investment in this project,” noted Mr. Beck. Aecon Group Inc. is Canada's largest publicly traded construction and infrastructure development company. Aecon and its subsidiaries provide services to private and public sector clients throughout Canada and internationally. The information in this news release includes certain forward-looking statements. Forward-looking statements are based on estimates and assumptions derived from past experience and interpretation of historical trends, current conditions and expected future developments. Many factors could cause Aecon's actual results, performance or achievements to vary from those expressed or inferred by these statements, including without limitation, the future of the Eastmain Joint Venture to recover the value of unpriced change orders, failure to achieve the targets associated with the Quito Airport, the achievement of lower than anticipated volumes of work in Western Canada and the failure of Innovative Steam Technologies to secure anticipated contract award levels. Risk factors are discussed in greater detail in the Section entitled “Risk Factors and Uncertainties” in Management's Discussion and Analysis of operating results and Financial condition for the year ended December 31, 2005 filed on SEDAR at www.sedar.com. Although Aecon believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurance that the expectations of any forward-looking statements will prove to be correct. --30--
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