BUSINESS

Canam reinstates dividend as Q3 profit surges to $10 million on higher revenues

10/23/2013 05:52 EDT | Updated 01/23/2014 06:58 EST
MONTREAL - Canam Group is reinstating its quarterly dividend after the fabricator of steel structures for the construction industry saw profits surge to $10 million in the third quarter on a strong boost in revenue.

The Quebec-based company earned 24 cents per share for the period ended Sept. 28, compared with 15 cents a year earlier when net income was $6.5 million.

Sales increased nearly 26 per cent to $285 million, mainly due to higher light structural steel sales.

Canam (TSX:CAM) says improved conditions will allow it to pay a dividend for the first time since 2011 without sacrificing its ability to invest and take advantage of business opportunities. The four cents per share dividend will be paid Jan. 3 to shareholders of record on Dec. 15. It represents a yield of 1.5 per cent.

The strong results caused the company's shares to close at their highest level in more than five years. On the Toronto Stock Exchange, they gained 60 cents, or 5.7 per cent, to $11.10 in Wednesday trading.

The company said the higher profit was due to increased revenues and improved profit margins in its three operating segments — buildings, structural steel and bridges.

"Both the volume and quality of the orders constitute encouraging signs," said president and CEO Marc Dutil. "Our backlog reflects the gradual improvement seen in the heavy structural steel market."

Canam's backlog of orders was $636 million up from $619 million as of June 29, 2013. Its net debt, excluding convertible debentures, was $147.6 million, $31.6 million lower than Dec. 31.

Sara O'Brien of RBC Capital Markets said the results beat her estimates and the 19 cents per share consensus of analysts.

"We view these results as positive given the significant lift in sales," she wrote in a report.

Canam Group is the largest fabricator of steel components in North America and employs 3,500 people in Canada, the United States, Romania, India and Hong Kong.