MONTREAL - The new head of SNC-Lavalin (TSX:SNC) says the engineering and construction company is not overly concerned about security threats to its operations in Algeria.

"It's a good positive country for us," president and CEO Pierre Duhaime said Friday during a conference call about third-quarter results.

The Montreal-based company has operated in the North African country for more than 40 years. However, its operations have twice been targeted by militants, killing 19 people in recent years.

Algerian security officials say private security guards working for SNC were ambushed east of the Algerian capital last month, killing seven and injuring two.

And a suicide bomber in August 2008 killed 12 Algerians on a bus heading to work at the Koudiat Acerdoune water treatment plant that the company was building.

"Most of our projects are in remote areas within fences and normally we don't see a threat to our employees," he told analysts.

"If we were having any fear for the security for our employees, that would be another story but we don't fear that kind of security threat."

Duhaime took over as chief executive last summer.

He refuted speculation in Algerian newspapers that one big contract is in jeopardy. Objections to the contract have been dismissed and final approval is just an administrative requirement, he said.

Dundee Securities analyst Richard Stoneman says SNC's share price is inflated and questions why investors would pay a premium for them when there are risks to its operations in Algeria.

He said Canadians "tend to celebrate being in odd places like that" because they mistakenly don't believe there are any security threats. And SNC has a history of operating in difficult areas of the world where some don't venture.

"At what point do you pack it in?" he said in an interview, noting that several French engineering companies have pulled out because they considered Algeria too dangerous.

Canadian businesses are generally viewed differently than the French, which were a colonial power in Algeria.

SNC-Lavalin reported Friday net earnings grew to $103.1 million or 68 cents per share in the quarter ended Sept. 30, up from a year-earlier profit of $91.3 million or 60 cents per share.

Quarterly revenue totalled $1.4 billion, slipping from $1.7 billion last year.

SNC-Lavalin beat analyst expectations for earnings per share, but fell short of revenue predictions for the quarter, according to figures compiled by Thomson Reuters.

Analysts had predicted earnings per share of 57 cents and pegged revenue at $1.6 billion, Thomson Reuters said.

SNC Lavalin said the increase in profitiability for the quarter was largely due to an increase in margin from primarily to fixed-price contracts involving one or more of its services, despite lower revenue from that activity.

However Duhaime said the increase wasn't sustainable.

"Certainly when you achieve 10 per cent profit on the packages you're doing very, very good, so I would not let anyone believe that we can go much higher than this. This would be unrealistic."

Pierre Lacroix of Desjardins Securities said SNC continues to be well positioned for prospective large contracts in the coming quarters.

"We believe the company's earnings and backlog will support continued growth in 2010 and 2011," he wrote in a report.

SNC Lavalin shares closed at $47.35 Friday, up $2.06 or 4.55 per cent on the Toronto Stock Exchange.

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