Author: Consultant

FINANCIAL HIGHLIGHTS

• Ivanhoe Mines recorded a profit of $108 million for Q3 2023, which includes a $12 million non-cash gain on the $575 million convertible bond fair valuation, compared with a profit of $87 million for Q2 2023. The profit in the quarter includes Ivanhoe Mines’ share of profit and finance income from the Kamoa-Kakula joint venture of $121 million for Q3 2023.
• Kamoa-Kakula sold 96,509 tonnes of payable copper during Q3 2023, recognizing revenue of $695 million, an operating profit of $373 million and quarterly EBITDA of $423 million.
• Copper in concentrate held in inventory at Kamoa-Kakula at quarter end increased to more than 3,000 tonnes. In addition, approximately 48,000 dry metric tonnes of concentrate were sent for tolling at the local smelter in Q3, with copper in work in progress at the end of the quarter exceeding 7,000 tonnes. Excess inventory is expected to be sold in the fourth quarter.
• Kamoa-Kakula’s cost of sales per pound (lb.) of payable copper sold was $1.34/lb. for Q3 2023 compared with $1.24 and $1.05 in Q2 2023 and Q3 2022, respectively. Cash costs (C1) per pound of payable copper produced during the quarter totaled $1.46/lb., compared to $1.41/lb. and $1.43/lb. in Q2 2023 and Q3 2022, respectively.
• Ivanhoe Mines Adjusted EBITDA was $152 million for Q3 2023, compared with $85 million for the same period in 2022, and $172 million for Q2 2023, which includes an attributable share of EBITDA from Kamoa-Kakula.
• Since entering Phase 1 commercial production on July 1, 2021, the Kamoa-Kakula joint venture has generated $2.14 billion of net cash from operating activities, which has funded both the Phase 2 and Phase 3 expansions to date.
• Ivanhoe Mines has a strong balance sheet with cash and cash equivalents of $303 million on hand as at September 30, 2023. The company expects Kamoa-Kakula’s Phase 1 and Phase 2 cash flow, together with additional local financing facilities that are advancing well, to be sufficient to fund the Phase 3 expansion capital cost requirements at current copper prices.
• Kamoa-Kakula’s full-year cash cost (C1) guidance is unchanged at $1.40 – $1.50 per pound and full-year production guidance is also maintained at 390,000 to 430,000 tonnes of copper in concentrate.

https://www.barchart.com/story/news/21745739/ivanhoe-mines-issues-third-quarter-2023-financial-results-and-review-of-construction-and-exploration-activities

TransAlta Corp. TA-T +4.51%increase reported its third-quarter profit rose compared with a year ago as its power production and revenue also came in higher.

TransAlta chief executive John Kousinioris says the third-quarter results demonstrate the value of the company’s strategically diversified fleet, which benefited from its asset optimization and hedging activities.

The power utility says its profit attributable to common shareholders totalled $372-million or $1.41 per diluted share for the quarter ended Sept. 30, up from $61-million or 23 cents per share a year earlier.

Revenue for the quarter totalled $1.02-billion, up from $929-million in the same quarter last year.

Production amounted to 5,678 gigawatt hours for the quarter, up from 5,432 gigawatt hours in the third quarter of 2022.

Last week, TransAlta announced a deal to buy Heartland Generation Ltd. and its power generation business in Alberta and B.C., in a deal valued at $658-million, including assumed debt.

Brookfield Asset Management Ltd. BAM-T -1.36%decrease brought in US$26-billion of fresh capital in the third quarter, flexing its fundraising might even as rivals have struggled to attract new money in fraught markets.

This latest influx of new money into its funds brought Brookfield’s fundraising total to US$61-million for the year. The driving force was private credit partnership with Oaktree Capital Group LLC, which raised US$11-billion in the quarter. Investors are flocking to private credit funds as rising interest rates have boosted returns and U.S. banks have reined in lending.

Brookfield has been making more deals than many of its peers in recent months, and has US$102-billion available to deploy into new investments. In a letter to shareholders, Brookfield chief executive officer Bruce Flatt and asset management president Connor Teskey said markets are getting more confident about how to assess risks and price deals accordingly, and predicted that the pace of dealmaking will pick up over the coming year.

“With record levels of dry powder currently on the sidelines, we expect a very busy period of transaction activity through to the end of 2024,” Mr. Flatt and Mr. Teskey wrote.

During the quarter, Brookfield closed its largest private equity fund to date, raising US$12-billion for its sixth opportunistic fund. It also had strong fundraising in infrastructure, raising US$3-billion for its fifth flagship infrastructure fund, bringing the total fund size to US$27-billion and showing the demand from investors for exposure to infrastructure assets and the protection from rising inflation they typically offer.

Earnings from fees increased 8 per cent to US$565-million in the quarter, in line with an 8-per-cent increase in fee-bearing capital over the same span, to US$440-million.

That helped boost distributable earnings – a metric Brookfield uses to show profits that could be paid out to shareholders – to US$568-million, up from US$524-million in the third quarter last year.

Third-quarter profit for Brookfield Asset Management was US$494-million, or 30 US cents per share, compared with US$395-million, or 24 US cents per share, in the same quarter last year.

Earnings attributable to the publicly-traded, 25-per-cent stake in the asset manager – parent company Brookfield Corp. owns the remaining 75 per cent of Brookfield Asset Management – was US$122-million.

Brookfield announced a quarterly dividend of 32 US cents per share, unchanged from the second quarter.

https://www.barchart.com/story/news/21696803/enbridge-records-q3-profit-as-it-awaits-approvals-for-us-gas-utility-acquisitions#:~:text=Enbridge%20Inc.%20says,Nov.%203%2C%202023.

Restaurant Brands International Inc. recorded a US$364 million profit in its most recent quarter as it continued to warn of increases in commodity, labour, and energy costs.

The Toronto-based owner of Tim Hortons, Burger King, Popeyes Louisiana Kitchen and Firehouse Subs says its third quarter net income compared with a profit of US$530 million a year earlier.

It says the decrease seen over the period ended Sept. 30 was primarily driven by income tax expenses and an increase in share-based compensation, non-cash incentive compensation expense and interest expenses.

The fast-food parent company, which reports in U.S. dollars, is also posting a revenue boost to US$1.83 billion from US$1.72 billion a year earlier.

The rise in revenue came even as RBI says it has seen the war in Ukraine and COVID-19 trigger increases in inflation, foreign exchange volatility and rising interest rates which may be exacerbated by the conflict in the Middle East.

It warns the geopolitical tensions could have an adverse impact on its business, if the company and its franchisees are not able to adjust prices sufficiently without negatively impacting consumer demand.

This report by The Canadian Press was first published Nov. 3, 2023.

Magna International Inc. is reporting a jump in profits and revenues for its third quarter, beating analyst expectations.

The auto parts manufacturer, which keeps its books in U.S. dollars, says net income leaped 36 per cent to US$394 million in the quarter ended Sept. 30 from US$289 million in the same period last year.

Magna says sales rose 15 per cent to US$10.69 billion last quarter from US$9.27 billion the year before.

On an adjusted basis, diluted earnings jumped to US$1.46 per share from US$1.10 per share.

The one-third increase far exceeded analyst expectations of US$1.32 per share, according to financial markets data firm Refinitiv.

The Aurora, Ont.-based company says its profit growth stems from the launch of new programs over the past year, higher light vehicle production across the globe and price increases to cover rising production costs.

This report by The Canadian Press was first published Nov. 3, 2023.

VANCOUVER — The cost savings from recent layoffs at Telus Corp. will have a bigger impact on the company’s financial results in the coming quarters, Telus president and CEO Darren Entwistle said.

“The incremental cost savings are expected to more meaningfully contributeto fourth quarter EBITDA, with the run rate expected to be felt by the second quarter of nextyear,” he said on a call with analysts Friday. 

Entwistle’s comments came as the cost of that restructuring took a bite out of the telecom company’s third-quarter profit, which dropped 74 per cent year-over-year despite a solid revenue boost and record customer growth.

In early August, Telus announced it would be cutting 6,000 jobs due to issues around regulation and competition, including 4,000 at its main Telus business. The reductions would be made through a combination of layoffs, early retirement and voluntary packages, as well as vacancies that would not be filled. The other 2,000 were at Telus International. 

At the time, the company said its planned restructuring would cost the company $475 million in 2023, but lead to annual savings of more than $325 million. 

The company has “substantially completed” the headcount reductions, chief financial officer Doug French said on the same call, adding Telusanticipates costs to remain elevated in the fourth quarter due to the restructuring.  

Net income attributable to shareholders fell to $136 million in the third quarter ended Sept. 30 from $514 million in the same period the year before, the telecommunications company said. 

On an adjusted basis, net income was down 20.8 per cent to $373 million. 

Among the other factors Telus attributed to the profit decline were higher depreciation and amortization from its network buildout and acquisitions, and higher financing costs.

The company said operating revenues rose 7.5 per cent in its third quarter to $4.99 billion from $4.64 billion a year earlier.

Adjusted basic earnings fell nearly 27 per cent to 25 cents per share from 34 cents per share, but slightly beat analyst expectations of 24 cents per share, according to financial markets data firm Refinitiv.

Telus said net customer growth hit a quarterly record of 406,000, an increase of 59,000 from the year before that it said was driven by demand for bundled services.

Mobile and post-paid churn were both up slightly, “against the backdrop of heightened competitive activity,” Entwistle said on the call. 

Results were overall in line with expectations, as the full benefits of Telus’s restructuring plans have yet to be reflected in results, Desjardins analyst Jerome Dubreuil said in a note to clients on Friday. 

RBC analyst Drew McReynolds said in a note Friday morning that the third-quarter results, “while not perfect,” demonstrated resilience amid a more competitively intense operating environment, especially in western Canada after the Rogers-Shaw merger. 

In another note after the bell, McReynolds said the third-quarter results represent a potential early glimpse into Telus’s playbook for competing against Rogers-Shaw. This includes “ceding as little market share as possible on wireline loading in Western Canada,” he wrote, noting the company’s “long-standing focus on bundling, product intensity and economies of scope, base management, customer service and execution.” 

Shares in the company were up 2.79 per cent at $24.32 in mid-afternoon trading. 

Canadian pipeline giant Enbridge Inc. ENB-T +0.43%increase has signed a deal to purchase seven existing renewable natural gas facilities in Texas and Arkansas for US$1.2-billion.

The acquisition of the facilities from Texas-based Morrow Renewables establishes Enbridge as one of the largest transporters of renewable natural gas by volume in North America, the Calgary-based company said Friday.

Renewable natural gas, often called RNG, refers to non-fossil-fuel-based renewable energy created from organic waste.

The seven facilities currently deliver RNG from municipal landfills in six Texas locations as well as Fort Smith, Ark.

While RNG can be produced from many different sources, including agricultural waste and food waste, landfill RNG facilities collect the gas that is produced by waste decomposition in the landfill.

The gas is then treated and compressed into pipeline-grade methane, so it can be easily blended into existing natural gas transmission networks and used to fuel transit fleets and heat homes and businesses.

“RNG fundamentals are strong in the United States and indicate continued growth in demand over the long-term as gas utilities increasingly continue to set RNG blending targets,” said Enbridge chief executive Greg Ebel on a third-quarter conference call Friday.

“This was the perfect opportunity to meaningfully add to our RNG portfolio with an accretive … tuck-in.”

Mr. Ebel said 60 per cent of the cash consideration for the purchases will be spread over a two-year period.

According to the World Biogas Association, organic waste from food production, food waste, farming, landfill and wastewater treatment are responsible for about 25 per cent of human-caused global emissions of methane, a harmful greenhouse gas.

But it’s possible to harness the methane from organic waste to create an environmentally friendly alternative to traditional natural gas that can be used for home heating, cooking and even fuelling vehicles.

Enbridge is one of a number of traditional fossil fuel companies that have been investing in RNG as concerns about climate change intensify.

Prior to Friday’s announcement, Enbridge Gas was actively involved in seven Canadian RNG projects operating or under construction, with more than 50 proposed projects in various stages of development.

In March, Enbridge purchased a 10-per-cent stake in Divert Inc., a U.S.-based food waste management company. Together, the two companies plan to partner on several projects across the U.S. that will convert food waste into renewable energy.

Also on Friday, Enbridge announced it has signed a deal to purchase from CPP Investments its stake in two offshore wind farms in Germany, for €625-million.

The company also remains on track to close by the end of the year its previously announced purchase of three U.S.-based utility companies – the East Ohio Gas Company, Questar Gas Company and its related Wexpro companies, and the Public Service Company of North Carolina.

The US$14-billion cash-and-debt deal is currently going through the regulatory approvals process south of the border. Enbridge said Friday it has secured 75 per cent of the financing required to complete the transaction.

Enbridge delivered a profit of $500-million in the third quarter of 2023, compared with $1.3-billion a year earlier.

The company said Friday its profit amounted to 26 cents per share for the quarter ended Sept. 30 compared with 63 cents per share in the same quarter a year earlier.

On an adjusted basis, Enbridge said it earned 62 cents per share, down from an adjusted profit of 67 cents per share a year earlier.

The Canadian economy added jobs at a slower pace in October and the unemployment rate ticked up, the latest sign of how higher interest rates are weighing on economic activity.

The labour market added 17,500 jobs last month, after increases of nearly 64,000 positions in September and 40,000 in August, Statistics Canada said Friday in a report. Analysts on Bay Street were expecting a gain of 25,000 in October.

Despite the increase, the unemployment rate rose to 5.7 per cent from 5.5 per cent, the highest level since January, 2022. The labour force is expanding quickly, because of an immigration boom, but employers are not creating enough jobs to keep the jobless rate from rising.

Meanwhile, average hourly wages rose 4.8 per cent on an annual basis in October – down from a 5-per-cent pace in September. This is an encouraging sign for the Bank of Canada, which has repeatedly flagged elevated wage growth as a risk to the inflation outlook.

The economic data have softened in recent months: Gross domestic product has stagnated, job vacancies are falling and consumers are pulling back on purchases as businesses and households contend with the highest borrowing rates in more than two decades.

After Friday’s report, analysts said the Bank of Canada was unlikely to raise its benchmark interest rate any further from its current 5 per cent.

“While the headline job gain was uneventful, make no mistake that the underlying picture for Canada’s labour market is softening. Exhibit A on that front is the grinding rise in the unemployment rate,” Bank of Montreal chief economist Doug Porter wrote to clients.

He added: “This will keep the Bank of Canada pinned more fully to the sidelines, although we still believe that rate relief remains a distant prospect.”

The labour report showed mixed results by region and industry. Alberta added 37,700 positions in October, the most of any province. At the other end, employment fell by 22,100 in Quebec and 14,300 in Ontario. Because of the weakness in Quebec, Saskatchewan now has the lowest unemployment in the country at 4.4 per cent.

Employment rose by 23,000 in construction, the most by industry. Manufacturing shed 18,800 roles, while another 21,700 positions were lost in wholesale and retail trade.

After hitting a record low of 4.9 per cent last year, the unemployment rate has been moving higher. Statscan noted there were 1.2 million unemployed persons in October, an increase of 171,000 since April. The agency noted that among those unemployed in September, 60 per cent remained unemployed in October, a greater proportion than a year ago.

This is “an indication that job seekers are facing more difficulties finding employment than a year ago,” the report said.

In October, one in three Canadians aged 15 and older was living in a household that found it difficult or very difficult to meet its financial needs for necessary expenses over the previous four weeks, Statscan said on Friday. This proportion was down slightly from a year ago (35.5 per cent), but was much higher than three years ago (20.4 per cent).

The annual inflation rate has ebbed to 3.8 per cent from a peak of 8.1 per cent last year. Still, the Bank of Canada doesn’t expect inflation to return to its 2-per-cent target until mid-2025. Moreover, price increases remain elevated for necessities such as food and shelter.

From a labour perspective, the coming months could be challenging for job seekers.

“We suspect that given the weak trend in economic activity currently and its implications for labour demand, job growth will continue to lag that of the overall population for the remainder of this year and into 2024,” said Andrew Grantham, senior economist at CIBC Capital Markets, in a report.

Mr. Grantham said the unemployment rate could rise further and peak somewhere between 6 per cent and 6.5 per cent. “That should help to ease wage and overall inflationary pressures, allowing for interest rate cuts to start” in the second quarter of 2024, he said.