Author: Consultant

Dollarama set to hike prices up to $5, raise dividend as profits continue to grow

Inflation is coming to the dollar store.

Discount retailer Dollarama Inc.DOL-T +3.04%increase announced on Wednesday that price tags up to $5 will begin appearing on its store shelves in the coming year. Until now, Dollarama’s highest price point was $4.

The decision is yet one more signal that prices are rising across the board: The Montreal-based company has consistently said that it would only pass on elevated costs to shoppers if competitors do so first. Retailers are facing higher costs for everything from transportation, to wages, to packaging and the raw materials such as plastic that go into making products.

“We’ve seen huge pressure on all retailers to increase their prices and mitigate some of the pressures that are coming from all the multiple points and inputs that create the final retail [price],” Dollarama president and chief executive officer Neil Rossy said on a conference call Wednesday to discuss the company’s fourth-quarter results.

Even with the increasing costs, Dollarama has continued to grow its profits, as sales have increased and costs related to COVID-19 have come down. The company reported that its net earnings jumped to nearly $220-million, or 74 cents per share in the fourth quarter, compared to $173.9-million or 56 cents per share in the same period last year.

At times of high inflation, shoppers typically become more price-sensitive, which can benefit discount stores. Grocery giant Loblaw Cos. Ltd. for example, recently noted that traffic to its No Frills stores has been rising. Dollarama is focused on maintaining “relative value” compared to other stores, even as its prices rise, Mr. Rossy said.

It has been more than six years since Dollarama introduced the $4 price point at its stores, and the company has been absorbing any rising costs since then, he said. Adding new price points will allow the company to offset higher costs, and will also mean new products will be offered at Dollarama stores that otherwise would be out of the price range.

On Wednesday, the company announced a 10-per-cent increase to its quarterly dividend, to 5.5 cents per common share.

Dollarama has been opening new stores, which helped push its sales to $1.2-billion in the 13 weeks ended Jan. 30, up 11 per cent compared to the same period in the prior year. Comparable sales – an important metric that tracks sales growth not related to new store openings – also grew, by 5.7 per cent in the quarter.

The sales bump was partly due to easing restrictions related to COVID-19: in the same period the prior year, a temporary ban on the sale of non-essential items in Quebec affected roughly 30 per cent of Dollarama’s stores. While fourth-quarter sales this year were impacted by the Omicron variant of the virus – which changed people’s shopping patterns and led to some provincial restrictions in December and January – Dollarama was able to sell its full product assortment, and reported strong sales for its seasonal products and for household items. As restrictions have eased, the retailer has seen shoppers generally stocking up less on each trip, but visiting more frequently.

The company now has 1,421 stores across Canada, and plans to open 60 to 70 new locations in the coming year. Dollarama is forecasting comparable sales growth in the 4 to 5 per cent range. But the company also expects that it will be more impacted by supply chain and other inflationary pressures, including rising costs for shipping.

“The real challenge for everybody who imports a large quantity of goods, across the entire retail platform, is a logistics challenge – for the last six months to a year and will continue for the foreseeable future,” Mr. Rossy said. “… Those goods are en route, and we have enough goods that it’s a non-issue. But certainly it is more of a challenge than it’s ever been.”

The company’s warehouse space provides a buffer that has allowed it to handle supply chain delays better than many other companies, Mr. Rossy said. To support its store growth, the company is currently building a new 500,000-square-foot warehouse in Laval, Que., its seventh warehouse in Canada.

“There is something to be said, at times, for not-just-in-time delivery,” Mr. Rossy said.

For the full fiscal year ended Jan. 30, Dollarama reported net earnings of $663.2-million or $2.19 per share, compared to $564.3-million or $1.82 per share in the prior year. Sales for the full year grew by 7.6 per cent to $4.3-billion.

China’s rich are moving their money to Singapore. Beijing’s crackdown is one of the reasons

More and more wealthy Chinese are worried about keeping their money on the mainland and some see Singapore as a safe haven.

Since protests disrupted Hong Kong’s economy in 2019, affluent Chinese have looked for alternative places to store their wealth. Singapore proved attractive because of its large Mandarin Chinese-speaking community and, unlike many countries, it doesn’t have a wealth tax. 

The trend appeared to pick up last year after Beijing’s sudden crackdown on the education industry and emphasis on “common prosperity” — moderate wealth for all, rather than just a few. 

That’s according to CNBC’s interviews with firms in Singapore that are helping wealthy Chinese move their assets to the city-state via the family office structure.

A family office is a privately held company that handles investment and wealth management for an affluent family. In Singapore, setting up a family office typically requires at least $5 million in assets.

Over the last 12 months, inquiries about setting up a family office in Singapore have doubled at Jenga, a five-year-old accounting and corporate services firm, according to its founder Iris Xu. She said the majority of inquiries come from people in China or emigrants from the country. [Wealthy Chinese] believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there.Iris XuFOUNDER OF JENGA

About 50 of her clients have opened family offices in Singapore — each with at least $10 million in assets, Xu said. 

China’s rapid economic growth has minted hundreds of billionaires in just a few decades. Many more joined their ranks their last year, according to Forbes.

That brought the total number of billionaires in China to 626, second only to the United States’ 724 billionaires, the data showed.

Xu said her Chinese clients “believe there are plenty of opportunities to make a fortune in China, but they are not sure whether it is safe for them to park money there,” according to a CNBC translation of the interview in Mandarin. 

‘Common prosperity’ worries

New family office-related work is coming disproportionately from Chinese clients, said Ryan Lin, a director at Bayfront Law in Singapore. His firm also has clients from India, Indonesia and parts of Europe.

Mainland China’s tight capital controls — an official limit of $50,000 in overseas foreign exchange a year — limit those billionaires’ ability to move money out of the country, Lin said.

That cap is set by the State Administration of Foreign Exchange, which did not immediately respond to a CNBC request for comment.

Although those capital controls mean many Chinese clients are opening family offices with smaller amounts of capital, Lin said most own revenue-generating business outside the mainland. 

https://www.cnbc.com/2022/03/30/chinas-wealthy-moving-money-to-singapore-amid-common-prosperity-push.html

Recession warning from Germany’s top economic advisors as Putin’s gas deadline nears

Germany’s heavy reliance on Russian energy could tip its economy into recession, an independent economic think tank warned on Wednesday.

There are rapidly rising concerns over what Russia’s unprovoked invasion of Ukraine will mean for European economies. The war has contributed to higher energy prices, it’s pushing up food prices too and there are additional expenses to deal with a massive influx of Ukrainians fleeing the war.

There is also the ongoing threat that Moscow might choose to cut its supplies of natural gas into the bloc — which could mean the collapse for many businesses.

“The high dependence on Russian energy supplies entails a considerable risk of lower economic output and even a recession with significantly higher inflation rates,” the German Council of Economic Experts, which advises the government in Berlin, said in a report Wednesday.

Germany’s Chancellor Olaf Scholz expressed a similar concern last week when addressing the country’s Parliament, saying that imposing an immediate ban on Russia energy imports “would mean plunging our country and the whole of Europe into a recession.”

His comments highlighted the dependence of Germany, and other EU nations, on Russia for energy supplies.

In 2020, for example, Germany imported almost 59% of its natural gas from Russia, according to data from Europe’s statistics office. Other EU nations registered even higher dependencies with the Czech Republic importing 86% of Russian gas, and Latvia and Hungary importing more than 100% — meaning they were buying more than their domestic needs.Germany should immediately do everything possible to take precautions against a suspension of Russian energy supplies.German Council of Economic Experts

Earlier on Wednesday, Germany’s Economy Minister Robert Habeck triggered a first warning, out of three possible levels, on gas stockpiles. He urged businesses and households to reduce their energy consumption, saying “every kilowatt hour counts,” according to Reuters.

Energy dependency has become even more concerning for Europe after Russia’s President Vladimir Putin said last week that “unfriendly” nations would have to pay for natural gas in rubles. This plan would prop up the Russian currency, which has plummeted in the wake of the invasion of Ukraine. Putin has previously set a March 31 deadline for the ruble payments.

However, western nations, including Germany, have said this would be a breach of contract and urged businesses to keep paying in euros or U.S. dollars. The division increases the chances of a disruption in energy flows.

“Germany should immediately do everything possible to take precautions against a suspension of Russian energy supplies and quickly end its dependence on Russian energy sources,” the German Council of Economic Experts also said on Wednesday.

The academic institution projected a gross domestic product rate of 1.8% this year and 3.6% in 2023 for Germany — provided that there is no suspension of energy deliveries.

In terms of inflation, its estimates point to a rate of 6.1% this year and 3.4% in 2023 for Europe’s largest economy.

Speaking Wednesday, European Central Bank President Christine Lagarde said that the war in Ukraine “poses significant risks to growth” and added that European households “are becoming more pessimistic and could cut back on spending.”

Russia will ‘always’ be a part of OPEC+, UAE energy minister says

The United Arab Emirates’ energy and infrastructure minister has insisted that Russia will always be a part of OPEC+ even as governments across the globe shun the oil exporter over its war in Ukraine.

Speaking to CNBC on Monday, Suhail Al Mazrouei, a former president of the oil alliance, said no other country could match Russia’s energy output and argued politics should not distract from the group’s efforts to manage energy markets.

“Always, Russia is going to be part of that group and we need to respect them,” he told Hadley Gamble at the Atlantic Council’s sixth annual Global Energy Forum in Dubai.

“OPEC+, when they speak to us, they need to speak to us including Russia,” he said, referring to the group’s negotiations with energy importers.

The U.S., Europe and Japan have called on oil-producing nations to do more to tackle record-high prices amid the war in Ukraine and ongoing supply shortages.

But, Al Mazrouei said Russian oil would play a vital role in achieving that. The comments come as Western allies express concern that Russian energy imports are indirectly topping up President Vladimir Putin’s war chest with oil and gas revenue.

“Who can replace Russia today? I cannot think of a country that can in a year, two, three, four or even 10 years replace 10 million barrels. It’s not realistic,” he said.

OPEC+, led by Saudi Arabia and Russia, has the capacity to increase oil output and bring down crude prices, which have jumped to over $100 a barrel.They are doing something but expecting the opposite reaction, and it’s not going to happen.Suhail Al MazroueiUAE MINISTER OF ENERGY AND INFRASTRUCTURE

“We are in agreement with their target or their objective of trying to calm the market and balance the market,” Al Mazrouei said. “But you don’t do it this way. You don’t do it by putting sanctions on a hydrocarbon that you cannot replace — unless you want the prices to go high.”

“They are doing something but expecting the opposite reaction, and it’s not going to happen.”

OPEC and non-OPEC ministers are slated to meet on Thursday via videoconference to determine the next phase of production policy.

It comes amid renewed pressure for the influential alliance to boost oil supplies after G-7 energy ministers said OPEC “has a key role to play” in easing market tensions.

“We call on oil and gas producing countries to act in a responsible manner and to examine their ability to increase deliveries to international markets particularly where production is not meeting full capacity noting that OPEC has a key role to play,” G-7 energy ministers said in a joint statement on March 10.

“This will help to ease tensions and note with appreciation announcements already made to this end.”WATCH NOWVIDEO02:51Russia’s war with Ukraine was a shock to the market, UAE energy minister says

The G-7 group of major economies is comprised of the U.K., U.S., Canada, Japan, Germany, France and Italy.

OPEC+ is in the process of unwinding record supply cuts of roughly 10 million barrels per day. The historic production cut was put in place in April 2020 to help the energy market recover after the coronavirus pandemic cratered demand for crude.

Most recently, the group’s been raising output by 400,000 barrels per day each month. The energy alliance has stayed the course despite sustained pressure from top consumers to pump more to cool prices and aid the economic recovery.

OPEC alone accounts for around 40% of the world’s oil supply.

West Fraser Timber Co. Ltd.

Cim LLC reduced its stake in West Fraser Timber Co. Ltd. (NYSE:WFG – Get Rating) by 2.7% in the 4th quarter, according to its most recent filing with the Securities & Exchange Commission. The fund owned 25,340 shares of the company’s stock after selling 696 shares during the quarter. Cim LLC’s holdings in West Fraser Timber were worth $2,296,000 as of its most recent SEC filing.

Other institutional investors also recently made changes to their positions in the company. Raymond James Financial Services Advisors Inc. raised its position in shares of West Fraser Timber by 33.6% in the 3rd quarter. Raymond James Financial Services Advisors Inc. now owns 20,042 shares of the company’s stock valued at $1,686,000 after purchasing an additional 5,039 shares during the last quarter. Mn Services Vermogensbeheer B.V. purchased a new position in West Fraser Timber during the 3rd quarter worth approximately $2,291,000. Voloridge Investment Management LLC purchased a new position in West Fraser Timber during the 3rd quarter worth approximately $1,755,000. Moors & Cabot Inc. acquired a new stake in shares of West Fraser Timber during the 3rd quarter worth approximately $130,000. Finally, Gotham Asset Management LLC acquired a new stake in shares of West Fraser Timber during the 3rd quarter worth approximately $200,000. 71.22% of the stock is owned by hedge funds and other institutional investors.

A number of brokerages have recently commented on WFG. CIBC raised shares of West Fraser Timber from a “neutral” rating to a “buy” rating and set a $118.60 price objective on the stock in a research note on Monday, January 10th. Scotiabank lifted their price target on shares of West Fraser Timber from C$143.00 to C$147.00 in a research note on Wednesday, February 16th. Finally, Zacks Investment Research raised shares of West Fraser Timber from a “hold” rating to a “strong-buy” rating and set a $101.00 price target on the stock in a research note on Friday, December 17th. Five research analysts have rated the stock with a buy rating and two have given a strong buy rating to the stock. According to MarketBeat.com, the company presently has an average rating of “Buy” and an average target price of $130.09.Shares of NYSE WFG traded down $0.88 during trading on Friday, hitting $86.56. 280,902 shares of the company were exchanged, compared to its average volume of 335,746. West Fraser Timber Co. Ltd. has a 12-month low of $64.14 and a 12-month high of $102.61. The company has a debt-to-equity ratio of 0.07, a quick ratio of 1.79 and a current ratio of 2.67. The company has a fifty day moving average price of $94.72 and a 200-day moving average price of $89.33. The firm has a market capitalization of $9.15 billion and a PE ratio of 3.25.

West Fraser Timber (NYSE:WFG ) last issued its quarterly earnings data on Monday, February 14th. The company reported $3.13 earnings per share (EPS) for the quarter, missing the consensus estimate of $4.78 by ($1.65). The company had revenue of $2.04 billion during the quarter, compared to analysts’ expectations of $2.61 billion. West Fraser Timber had a net margin of 28.02% and a return on equity of 39.91%. During the same quarter last year, the firm posted $3.78 earnings per share. Research analysts anticipate that West Fraser Timber Co. Ltd. will post 17.94 earnings per share for the current fiscal year.

The business also recently disclosed a quarterly dividend, which will be paid on Tuesday, April 5th. Investors of record on Friday, March 18th will be issued a $0.25 dividend. This is a positive change from West Fraser Timber’s previous quarterly dividend of $0.16. This represents a $1.00 annualized dividend and a yield of 1.16%. The ex-dividend date of this dividend is Thursday, March 17th. West Fraser Timber’s payout ratio is 3.76%.

West Fraser Timber Company Profile 

West Fraser Timber Co Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy. It offers spruce-pine-fir and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products.

Horgan announces one-time rebate to help B.C. drivers with high gas prices

British Columbia’s public auto insurer is giving a one-time rebate to help drivers cope with the cost of rising fuel prices caused by Russia’s invasion of Ukraine, Premier John Horgan announced Friday.

Horgan said the provincial government approached the Insurance Corporation of B.C. to provide drivers who have a basic auto insurance policy with a $110 rebate and commercial drivers with $165.

“Today, if we go to fill up at the pumps, sometimes it feels like it’s a bit of a holdup,” he told a news conference. “Prices are at unprecedented levels and those prices at the pump are a direct result of [Russian President] Vladimir Putin’s invasion of Ukraine.”

Gas prices in B.C.’s Lower Mainland hovered around $1.95 per litre on Friday. Outside Metro Vancouver, where taxes are lower, drivers were paying about 10 cents less per litre.

Horgan said the one-time payment is a better approach than cutting fuel taxes because the price will only increase again at the pumps.

He said the corporation is in a financial position to cover the cost of $395-million rebate. It is forecasting an annual net income of $1.9-billion for the 2021-22 fiscal year ending March 31.

In 2018, David Eby, who was then the minister in charge of the insurance corporation, compared the finances of the public auto insurer to a dumpster fire.

The NDP brought in legislation to prevent governments from dipping into reserves at the corporation “to pad their budgets,” Horgan said Friday.

But the difference with the rebate, he said, is that the money is going back to policy holders, who finance the corporation.

“This is a rebate based on the robust position the corporation is in,” Horgan said.

Public Safety Minister Mike Farnworth said drivers can expect the rebate to start rolling out in May.

Prof. Werner Antweiler, an economist at the University of British Columbia, said the relief payment will help as the market deals with a shortage of gasoline.

“The idea is we’re not interfering in the market. The market needs to do its magic of closing the gap between supply and demand through higher [gas] prices,” he said. “The higher prices are necessary.”

Antweiler said the focus needs to be on giving financial relief to commercial drivers because, in theory, if they get help, they won’t pass added costs on to consumers.

Peter Milobar, the B.C. Liberal party’s finance critic, said the government’s approach doesn’t target help at those who need it most as everyone gets the same rebate, including owners of electric vehicles.

“The fact that a single parent working two jobs and driving a Honda Civic is getting the same one-time rebate as a Tesla owner is ridiculous,” he said in a news release.

“Not everyone feels the impacts of these sky-high prices the same.”

U.S. Consumer Sentiment Drops More Than Initially Estimated In March

Revised data released by the University of Michigan on Friday showed consumer sentiment in the U.S. fell by more than initially estimated in the month of March.

The report showed the consumer sentiment index for March was downwardly revised to 59.4 from the preliminary reading of 59.7. Economists had expected the index to be unrevised.

With the unexpected downward revision, the consumer sentiment was at its lowest level since hitting 55.8 in August of 2011.

“Inflation has been the primary cause of rising pessimism,” said Surveys of Consumers chief economist Richard Curtin. “Inflation was mentioned throughout the survey, whether the questions referred to personal finances, prospects for the economy, or assessments of buying conditions.”

He added, “When asked to explain changes in their finances in their own words, more consumers mentioned reduced living standards due to rising inflation than any other time except during the two worst recessions in the past fifty years.”

The report showed one-year inflation expectations jumped to 5.4 percent in March from 4.9 percent in February, reaching the highest level since November 1981.

The current economic conditions index edged down to 67.2 in March from 68.2 in February, while the index of consumer expectations slumped to 54.3 from 59.4.

Gold Futures Settle Lower On Rate Hike Fears

Gold prices edged lower on Friday amid fears of aggressive monetary tightening by the Federal Reserve. However, with rising inflation, and tensions due to the ongoing war in Ukraine boosting its safe-haven appeal, the yellow metal posted a weekly gain.

Higher Treasury yields weighed on gold. Bond yields stayed firm at multi-year highs amid rising prospects of some sharper interest rate hikes.

A somewhat subdued dollar limited gold’s downside.

Gold futures for April ended down by $8.00 or about 0.4% at $1,954.20 an ounce. Gold futures gained 1.3% in the week.

Silver futures for May drifted down $0.305 to settle at $25.615 an ounce, while Copper futures for May settled at $4.6985 per pound, down $0.0440 from the previous close.

Chicago Fed President Charles Evans said Thursday he’s “comfortable” with raising rates in quarter-point increments, while being “open” to a 50 basis-point move if needed.

Evans expects six more 25 basis point increases in the central bank’s policy interest rate by the end of the year and three more next year, putting the Fed funds rate in a range of 2.75- 3 percent by the end of 2023.

In economic news today, a report released by the National Association of Realtors showed an unexpected drop in pending home sales in February.

NAR said its pending home sales index tumbled by 4.1% to 104.9 in February after plunging by 5.8% to a revised 109.4 in January. The continued decrease came as a surprise to economists, who had expected the index to rebound by 1%.

Meanwhile, revised data released by the University of Michigan showed consumer sentiment in the U.S. fell by more than initially estimated in the month of March. The report showed the consumer sentiment index for March was downwardly revised to 59.4 from the preliminary reading of 59.7. Economists had expected the index to be unrevised.

With the unexpected downward revision, the consumer sentiment was at its lowest level since hitting 55.8 in August of 2011.

Oil Futures Rebound After News About Strike On Storage Depot In Jeddah

After struggling for support earlier in the session, crude oil prices rallied Friday afternoon, lifted by news about a missile strike at an oil storage depot in Saudi Arabian city Jeddah.

The attack was reportedly launched by Yemeni Houthi rebels. A spokesman for the outfit is reported to have said that the group would announce more details on a wide operation in Saudi Arabia later in the day.

West Texas Intermediate Crude oil futures for May ended higher by $1.56 or about 1.4% at $113.90 a barrel, off the session’s low of $108.62 a barrel. WTI futures gained nearly 12% in the week.

Brent crude futures were up $1.07 or 0.9% at $120.10 a barrel a little while ago.

Videos posted in the media revealed the location of the storage that was attacked was near the North Jeddah Bulk Plant. Meanwhile, a Reuters source said a Saudi Aramco facility had been hit.