Author: Consultant

Oil falls 2% on expectations that U.S. Gulf supply disruption will ease

Oil prices plunged around 2% on Friday, on expectations that supply disruptions in the U.S. Gulf of Mexico would be short-term, while recession fears clouded the demand outlook.

Futures, however, were still on track for a weekly gain.

Brent crude futures fell $1.47, or 1.5%, to $98.13 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.08, or 2.2%, to $92.26 a barrel. Both contracts gained more than 2% on Thursday.

“We are pulling back a little bit after the big run up yesterday,” said Phil Flynn, an analyst at Price Futures group.

Brent was on track for a 3.5% gain this week after last week’s 14% tumble on fears that rising inflation and interest rates will hit economic growth and demand for fuel. WTI was on course for a 3.7% gain.

Crews were expected to replace a damaged oil pipeline piece nL1N2ZO154 by the end of the day on Friday, a Louisiana port official said, allowing for the resumption of production at seven offshore U.S. Gulf of Mexico oil platforms.

On Thursday, top U.S. Gulf of Mexico oil producer Shell said it halted production at three deepwater platforms in the region. The three platforms are designed to produce up to 410,000 barrels of oil per day combined.

The market also absorbed contrasting demand views from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).

“We are seeing an economic slowdown, but its unclear if it’s as big a slowdown as some of the recent outlooks have been predicting,” said Ole Hansen, head of commodity strategy at Saxo Bank. “The demand will ebb and flow, but supply is still the main concern.”

European sanctions on Russian oil are due to tighten later this year while a six-month coordinated energy release agreed by the United States and other developed economies is due to run its course by the end of the year.

On Thursday OPEC cut its forecast for growth in world oil demand in 2022 by 260,000 barrels per day (bpd). It now expects demand to rise by 3.1 million bpd this year.

The IEA, meanwhile, raised its demand growth forecast to 2.1 million bpd, citing gas-to-oil switching in power generation

The IEA also raised its outlook for Russian oil supply by 500,000 bpd for the second half of 2022 but said OPEC would struggle to boost production.

In the United States, import prices fell for the first time in seven months in July, helped by a strong dollar and lower fuel and nonfuel costs, while consumers’ one-year inflation outlook ebbed in August, the latest signs that price pressures may have peaked.

U.S. oil rigs rose three to 601 this week, energy services firm Baker Hughes Co said. The rig count, an indicator of future output, has been slow to grow with oil production only seen recovering to pre-pandemic levels next year.

Linamar Reports Sales Up On Market Share, Pricing, While Income Dips To $105M

Linamar Corp. says sales climbed in its last quarter on increased market share and higher pricing while profits saw a modest dip in part on higher input costs.

The manufacturer says net income for the quarter ending June 30 came in at $104.5 million, or $1.61 per share, down from $108 million or $1.65 per share.

Adjusted net earnings were $109.3 million, or $1.68 per share, up from $106.9 million or $1.63 per share.

Sales came in at $1.98 billion, up from $1.58 billion for the same quarter last year.

Analysts had expected revenue of $1.8 billion and an adjusted net income of $1.09 per share, according to financial markets data firm Eikon.

The company says sales were also boosted by fewer supply chain problems, as well as acquisitions in both its industrial and mobility segments.

This report by The Canadian Press was first published August 10, 2022.

OPEC, in contrast to IEA, sees lower 2022 oil demand growth

OPEC on Thursday cut its 2022 forecast for growth in world oil demand for a third time since April, citing the economic impact of Russia’s invasion of Ukraine, high inflation and efforts to contain the coronavirus pandemic.

The view from the Organization of the Petroleum Exporting Countries contrasts with that of the International Energy Agency, the adviser to industrialized countries, which earlier on Thursday raised its 2022 demand growth outlook.

OPEC in a monthly report said it expects 2022 oil demand to rise by 3.1 million barrels per day (bpd), or 3.2%, down 260,000 bpd from the previous forecast. The IEA raised its forecast by 380,000 bpd to 2.1 million bpd.

Oil use has rebounded from the worst of the pandemic and is set to exceed 2019 levels this year even after prices hit record highs. However, high prices and Chinese coronavirus outbreaks have eaten into OPEC’s 2022 growth projections.

“Global oil market fundamentals continued their strong recovery to pre-COVID-19 levels for most of the first half of 2022, albeit signs of slowing growth in the world economy and oil demand have emerged,” OPEC said in its report.

OPEC cut its 2022 global economic growth forecast to 3.1% from 3.5% and trimmed next year to 3.1%, saying that the prospect of further weakness remained.

“This is, however, still solid growth, when compared with pre-pandemic growth levels,” OPEC said. “Therefore, it is obvious that significant downside risk prevails.”

Oil prices held on to an earlier gain after the OPEC report was released, finding support from the IEA’s view on demand and trading above $98 a barrel

OPEC pumps more

OPEC and allies, including Russia, known collectively as OPEC+, are ramping up oil output after record cuts put in place as the pandemic took hold in 2020.

In recent months OPEC+ has failed to fully achieve its planned production increases owing to underinvestment in oilfields by some OPEC members and by losses in Russian output.

The report showed OPEC output in July rose by 162,000 bpd to 28.84 million bpd, a smaller increase than pledged.

OPEC’s take on the outlook for 2023 suggests that the market could remain tight.

OPEC left its 2023 world demand growth projection unchanged at 2.7 million bpd and expects supply from non-member countries to rise by 1.71 million bpd, meaning OPEC will need to pump around 900,000 bpd more to balance the market.

While the 2023 outlook for overall non-OPEC supply was left steady, OPEC sees a slight acceleration in U.S. shale growth.

Supply of U.S. tight oil, another term for shale, is expected to rise by 800,000 bpd in 2023, up from 740,000 bpd in 2022, although this year’s forecast was revised down.

Canada Pension Plan reports $23-billion loss in June quarter as markets churn

The Canada Pension Plan Investment Board said it lost 4.2 per cent in its most recent quarter, subtracting $23-billion from the fund’s assets.

It could have been worse: The three months ended June 30 were awful for most investors. According to Royal Bank of Canada’s RBC I&TS All Plan Universe, defined benefit pension plan assets decreased by 8.6 per cent, tied with the third quarter of 2008 for the biggest decline in the 28 years RBC has been began tracking Canadian plan performance.

The S&P Global LargeMidCap Index, a measure of stocks CPPIB uses as 85 per cent of its benchmark reference portfolio, fell nearly 13.5 per cent in the quarter. The FTSE Canada Universe All Government Bond Index, the remaining 15 per cent of the benchmark, fell nearly 6 per cent. Blended, that means CPPIB beat a benchmark of negative 12.4 per cent by more than eight percentage points.

CPPIB closed the quarter with assets of $523-billion, compared to $539-billion at the end of the previous quarter. The investment losses were offset by $7-billion in contributions from the Canada pension Plan.

In the early days of the COVID-19 pandemic, when global markets tumbled, the CPPIB asset mix blunted the pain, and the pension fund manager lost much less money than an ordinary investor in the stock market. However, CPPIB often trails when public stock markets rise rapidly, as they did in several recent quarters when investors shook off their pandemic fears.

Now, we have returned to falling markets, and CPPIB is outperforming them.

“Financial markets experienced the most challenging first six months of the year in the last half century, and the fund’s first fiscal quarter was not immune to such widespread decline,” John Graham, CPPIB chief executive officer, said in a statement accompanying the returns. “The uncertain business and investment conditions we noted in the previous quarter continue, and we expect to see this turbulence persist throughout the fiscal year.”

CPPIB said its loss was driven by declines in public stock markets, but investments in private equity, credit and real estate also contributed “modestly.” CPPIB also lost money in fixed income investments, such as bonds, due to higher interest rates imposed by central banks to fight inflation.

Gains by external portfolio managers, quantitative trading strategies and investments in energy and infrastructure contributed positively. CPPIB also recorded foreign exchange gains of $3.1-billion as the Canadian dollar weakened against the U.S. dollar. (Most of CPPIB’s investments are held outside Canada, but it reports results in Loonies.)

The Canada Pension Plan, founded in 1966, is the primary national retirement program for working Canadians. The government created CPPIB in 1999 to professionally manage the plan’s money. Over time, CPPIB has embraced active management and its blend of stocks, bonds, real estate, infrastructure, private equity and other specialized investments has outperformed public markets and its reference portfolio.

While CPPIB reports quarterly, it points to its multigenerational mandate and likes to emphasize its long-term returns. The plan’s five-year net return, net of investment costs, was 8.7 per cent through June 30; the 10-year net return was 10.3 per cent.

CPPIB’s annualized return for the 10 years ended last Sept. 30 was, at 11.6 per cent, the highest 10-year performance figure in its history.

Canada Goose Reports Results For First Quarter Fiscal 2023

Business Wire – Thu Aug 11, 5:45AM CDT

Canada Goose Holdings Inc. (“Canada Goose” or the “Company”) (NYSE:GOOS, TSX:GOOS) today announced financial results for the first quarter ended July 3, 2022 (“Q1 2023” or “Q1 ended July 3, 2022”). All amounts are in Canadian dollars unless indicated.

“Our first quarter fiscal 2023 results reflect strong early leading indicators for the year, and we have seen encouraging trends in store productivity,” said Dani Reiss, Chairman and CEO. “This fall, we look forward to our planned store openings, in some of the most exciting cities and shopping districts around the world, as well as our upcoming collection launches, thoughtfully curated and designed to drive brand heat and capture new consumers globally.”

Canadian Tire Corp. Ltd. Reports Second-Quarter Profit Fell From A Year Ago

Canadian Tire Corp. Ltd. reported lower second-quarter profit compared to a year ago.

The retailer reported its net income attributable to shareholders totalled $145.2 million or $2.43 per diluted share for the quarter, down from $223.6 million or $3.64 per diluted share a year earlier.

Canadian Tire says retail sales rose 9.9 per cent and comparable sales, excluding petroleum, gained 5.0 per cent. Retail sales at its SportChek banner grew 0.6 per cent as comparable sales gained 4.1 per cent, and retail sales at its Mark’s banner rose 21.1 per cent as comparable sales rose 20.9 per cent.

On a normalized basis, Canadian Tire says it earned $3.11 per diluted share, down from a normalized profit of $3.72 per diluted share a year earlier.

The company says while the performance of the retail segment of the business remains significantly above pre-pandemic levels on a normalized basis, higher expenses including foreign exchange resulted in earnings coming in lower in the second quarter compared to the prior year.

Canadian Tire also says its financial services revenue grew 15.0 per cent, driven by growth in receivables and growth in credit card sales, due to increased customer activity and new account acquisitions.

This report by The Canadian Press was first published Aug. 11, 2022.

Brookfield profit declines 39% as rates rise

Brookfield Asset Management Inc. BAM-A-T +1.31%increaseCEO Bruce Flatt says the inflationary environment is enhancing the value of its investments – but the company’s second-quarter results show the company is not completely immune from current market conditions.

The company reported a 39-per-cent decline in net income, to US$1.48-billion, owing, in part, to decreased gains on the sale of assets and an increase in interest expenses that outpaced revenue gains.

The company’s funds-from-operations metric, which removes a number of non-cash items from the calculation, and the company’s “distributable earnings,” which removes additional expense items and adds back in dividends from Brookfield’s investments, fell by more modest amounts.

Brookfield recorded US$2.41-billion in interest expense in the quarter, up 31 per cent from 2021′s second quarter. The amount of corporate borrowings on the balance sheet rose 11 per cent, to $12.05-billion.

‘Interest rate stress caused significant market disruption in the second quarter of 2022, but it is important to keep this in context,” Mr. Flatt wrote in his shareholder letter, addressing the interest-rate rises in a macroeconomic context.

Despite two U.S. Federal Reserve rate increases, and more to come, Mr. Flatt theorizes, “rates are expected to settle at historically “low-ish” levels, which should still be very conducive to business … balance sheets for individuals and companies are in a good position to withstand this shift, and before we know it, we expect to be in a recovery.”

Brookfield has billions of its own money invested in giant portfolios of what it calls “alternative assets” – real estate, infrastructure, energy and distressed debt. Brookfield also attracts outside money, from institutional investors and the wealthy, to invest alongside it. The assets it buys are placed in partnerships, some of which trade on U.S. and Canadian exchanges, and other private funds.

“With many of our infrastructure, renewables and real estate assets positioned to benefit from inflation, our revenue streams and cash margins are widening as the compounding effect of inflation takes hold,” Mr. Flatt wrote. “With equity markets down 20 per cent to 30 per cent from their peak and credit markets “turning sideways for many corporate borrowers,” he wrote, “the investing environment for businesses like ours continues to strengthen. We are therefore investing capital at excellent returns—much higher than we would have otherwise achieved under conditions like those experienced in late 2020 and 2021.”

Indeed, Brookfield seems to have no trouble attracting dollars from current and new clients. Brookfield said it had record inflows of US$56-billion since the end of the last quarter. Fee-bearing capital – the amount of outside investor money Brookfield manages – was US$392-billion at June 30.

In the quarter, Brookfield closed its green-energy Global Transition Fund at US$15-billion Mr. Flatt said Brookfield is completing a first close for its latest infrastructure fund of US$20-billion and private equity fund of US$8-billion. Brookfield has also raised about US$14.5-billion for an opportunistic real estate fund.

Mr. Flatt said a US$16-billion opportunistic debt strategy fund will soon be mostly invested, which will set the stage for Brookfield to launch another.

Brookfield said in May it will spin off a new asset-management business to shareholders by the year’s end, creating a roughly US$80-billion entity that will pay most of the dividends its shareholders now receive. The company invests for itself, which requires it to raise billions of dollars in capital, but also manages money for others. Money managers who need little capital tend to get higher valuations from investors, a benefit Brookfield wasn’t receiving with the two businesses yoked together as one.

Mr. Flatt said in his letter that former Bank of Canada governor Mark Carney, who joined Brookfield as as an advisor to its Transition funds, will serve as chairman of the board of the new money manager, which will be called Brookfield Asset Management Ltd.

Mr. Flatt will be CEO of the asset manager while also remaining CEO of the current company, which will be renamed Brookfield Corp.

The separate asset-management company would add to a dizzying array of Brookfield entities available to investors. Three limited partnerships – Brookfield Infrastructure Partners LP, Brookfield Renewable Partners LP and Brookfield Business Partners LP – trade on the New York and Toronto exchanges. Brookfield Infrastructure Corp., a subsidiary of the limited partnership, trades on the NYSE. Brookfield Asset Management Reinsurance Partners Ltd. trades on both exchanges. And the Brookfield Global Infrastructure Securities Income Fund trades in Toronto.

METRO REPORTS 2022 THIRD QUARTER RESULTS

2022 THIRD QUARTER HIGHLIGHTS

•  Sales of $5,865.5 million, up 2.5%
•  Food same-store sales up 1.1%
•  Pharmacy same-store sales up 7.2%
•  Net earnings of $275.0 million, up 9.0% and adjusted net earnings⁽¹⁾ of $283.8 million, up 8.7%
•  Fully diluted net earnings per share of $1.14, up 10.7%, and adjusted fully diluted net earnings per share⁽¹⁾
  of $1.18, up 11.3%

https://www.newswire.ca/news-releases/metro-reports-2022-third-quarter-results-869872959.html

Manulife reports drop in second-quarter core profit

Manulife Financial Corp slightly beat analysts’ estimates for second-quarter core profit but saw earnings drop from a year earlier, due to market volatility that weighed on its asset management unit and COVID-19 restrictions in Asia.

Canada’s largest life insurer reported core earnings of $1.56-billion, or 78 cents a share, in the three months ended June 30, compared with $1.68-billion, or 83 cents a share, a year earlier. Analysts had expected 76 cents a share.

Analysts had forecast a muted second quarter for Canadian life insurers, on expectations that their substantial asset management units would take a hit from equity market declines. They also noted that lingering COVID-19 restrictions in Asia could prove a challenge, a headwind the company had flagged in its previous quarterly results announcement.

Manulife reported core earnings declines of 14% in its global wealth and asset management unit as fee income and assets under management declined; 4.6% in its U.S. business on lower demand for some insurance products due to higher inflation; and 2.5% in Asia, on lower sales, particularly in Hong Kong and Japan.

An 8.5% increase in its Canadian earnings, lifted by growth in new business value, helped offset the declines somewhat.

Net income attributable to shareholders was $1.09-billion or 53 cents per share, compared with $2.65-billion, or $1.33 a share, a year earlier.