Author: Consultant

CAE Inc. is reporting a big drop in profits for its latest quarter as the company grapples with supply-chain constraints.

The flight simulator maker says net income attributable to shareholders fell 26 per cent to $48.3 million in the quarter ended June 30 from $65.3 million in the same period a year earlier.

The Montreal-based company says its revenue rose six per cent to $1.07 billion from $1.01 billion the year before.

CAE says adjusted earnings in its first fiscal quarter decreased 13 per cent to 21 cents per share from 24 cents per share last year.

CAE chief executive Marc Parent says the company’s more than 50 per cent year-over-year backlog growth to $17 billion speaks to a sunny horizon despite “supply-chain headwinds.”

The company says it is targeting about 10 per cent growth in adjusted operating income for its civil aviation segment this year and annual revenue growth in the low- to mid-single-digit range for its beleaguered defence business.

This report by The Canadian Press was first published Aug. 13, 2024.

2024 THIRD QUARTER HIGHLIGHTS

•  Sales of $6,651.8 million, up 3.5%
•  Food same-store sales⁽¹⁾ up 2.4%
•  Pharmacy same-store sales⁽¹⁾ up 5.2%
•  Net earnings of $296.2 million, down 14.6%, and adjusted net earnings⁽¹⁾ of $305.0 million, down 3.1%
•  Fully diluted net earnings per share of $1.31, down 12.1%, and adjusted fully diluted net earnings per share⁽¹⁾ of $1.35, unchanged versus last year
• Transition to the new automated Terrebonne distribution centre completed

https://www.newswire.ca/news-releases/metro-reports-2024-third-quarter-results-875071818.html

WSP Global Inc.WSP-T +1.99%increasehas struck a deal to acquire U.S. consulting firm Power Engineers Inc. as the Canadian engineering giant bulks up its capabilities in the North American energy sector.

Montreal-based WSP will pay US$1.78-billion in cash for Hailey, Idaho-based Power Engineers and take on its 4,000 employees, according to the terms of the agreement announced after market close Monday.

Employee-owned Power has a proven track record doing business with the most prominent utilities on the continent, WSP said in a statement. Its revenues are almost entirely generated within the United States, with over 90 per cent of this revenue coming from repeat business.

“The acquisition will mark a transformative step that will position us at the forefront of the energy transition,” WSP Chief Executive Alexandre L’Heureux said in the statement. “This opportunity brings forth a wealth of strategic benefits.”

WSP said it expects the acquisition to drive accelerated growth and that it will be immediately accretive to its adjusted net earnings per share. It will finance the deal through a combination of new terms loans and stock sales.

The Canadian engineering company said it intends to launch a public offering of subscription receipts worth about $500-million in a bought deal led by CIBC Capital Markets, National Bank Financial and RBC Dominion Securities as joint book-runners. It is also selling $500-million of shares through private placements with four of its major shareholders, namely GIC Pte. Ltd, Caisse de dépôt et placement du Québec, British Columbia Investment Management Corp., and a subsidiary of Canada Pension Plan Investment Board.

“Through this investment, CDPQ is reaffirming its long-standing commitment to WSP, allowing the company to carve out an influential position in the global power and energy industry and contribute to the transition underway” Kim Thomassin, executive vice-president at the Caisse, said in a statement. The pension fund manager’s financial pledge is worth $158-million.

The global energy landscape makes this transaction all the more timely, Mr. L’Heureux said on a conference call Monday. Large utilities invested nearly $171-billion last year alone to modernize their aging infrastructure and decarbonize their operations, he said.

Mr. L’Heureux had hinted a deal was coming, telling analysts on an earnings call last month that it was eyeing larger acquisitions after a string of smaller takeovers over the past 18 months. The CEO said he saw opportunities for growth in Europe, Australia and the United States, and that it didn’t matter for WSP’s prospects who won the U.S. presidency in November.

WSP’s backlog of work booked but not yet complete stood at $14.7-billion at the end of June, an all-time high.

Sun Life Financial Inc. says its net income slipped in the second quarter on a restructuring charge while its adjusted net income rose.

The insurer says it had a net income of $646 million, down two per cent from the same quarter last year, as it took a $138 million restructuring charge related to efforts to improve productivity and drive earnings growth.

The company says its adjusted or underlying net income was an even $1 billion, up from $920 million last year.

It says the increased earnings reflected growth in Canada and Asia, while the U.S. division saw a small pullback in income related to Medicaid redeterminations in the dental program.

The company says its assets under management stood at $1.47 trillion at quarter end, up $98 billion or seven per cent from last year.

It says its underlying return on equity was 18.1 per cent, up from 17.7 per cent last year.

This report by The Canadian Press was first published Aug. 12, 2024.

• The U.S. crude oil benchmark fell as an expected attack by Iran on Israel has not materialized.
• Concerns about the strength of global oil demand are also weighing on the market.

U.S. crude oil prices fell more than 1% on Tuesday, as slowing global demand overshadows tensions between Iran and Israel.

The market has shifted its focus back to fundamentals after the International Energy Agency and OPEC flagged softening consumption in China this week.

Here are Tuesday’s energy prices:

• West Texas Intermediate September contract: $79.01 per barrel, down $1.05, or 1.31%. Year to date, U.S. crude oil has gained 10.23%.
• Brent October contract: $81.25 per barrel, down $1.05, or 1.28%. Year to date, the global benchmark is ahead 5.43%.
• RBOB Gasoline September contract: $2.40 per gallon, down 4 cents, or 1.74%. Year to date, gasoline is up 14%.
• Natural Gas September contract: $2.21 per thousand cubic feet, up more than 2 cents, or 1.14%. Year to date, gas is lower by 12%.

World oil demand continues to slow as China’s post-pandemic rebound has run its course, according to the IEA. Global demand in the second quarter increased at its slowest pace, 710,000 barrels per day, since the end of 2022, according to the Paris-based agency.

OPEC on Monday lowered its demand growth forecast by 135,000 barrels per day this year citing softness in China. The IEA forecasts a crude oil surplus in 2025 even if OPEC keeps production cuts in place, due to output in Brazil, Canada, Guyana and the U.S.

U.S. crude rallied more than 4% in the previous session as Israel braced for an expected attack from Iran and the Pentagon accelerated the deployment of a carrier strike group to defend its ally.

“The oil market’s concern is that a broader conflict between Israel and Iran could cause oil supply disruptions in and around the Strait of Hormuz, through which about 20% of the world’s seaborne crude supply is shipped,” Henning Gloystein, head of energy at the Eurasia Group, wrote to clients in a note.

“These risks remain low-probability events, which helps explain the modest increase in prices,” Gloystein wrote.

Rob Ginsberg, managing director at Wolfe Research, said U.S. crude could rise above a resistance level of $84 per barrel. “Once out, mid to high $90s isn’t crazy,” Ginsberg said.

• The producer price index, a measure of wholesale inflation, increased 0.1% on the month, less than 0.2% forecast. PPI excluding food and energy was flat.
• On a year-over-year basis, headline PPI rose 2.2%, a sharp drop from the 2.7% reading in June.

A key measure of wholesale inflation rose less than expected in July, opening the door further for the Federal Reserve to start lowering interest rates.

The producer price index, which measures selling prices that producers get for goods and services, increased 0.1% on the month, the Labor Department’s Bureau of Labor Statistics reported Tuesday. Excluding volatile food and energy components, the core PPI was flat.

Economists surveyed by Dow Jones had been looking for an increase of 0.2% on both the all-items and the core readings.

A further core measure that also excludes trade services showed a rise of 0.3%.

On a year-over-year basis, the headline PPI increased 2.2%, a sharp drop from the 2.7% reading in June.

Stock market futures rose following the news while Treasury yields moved lower.

The wholesale inflation reading was relatively tame despite a 0.6% jump in final demand goods prices, the biggest move higher since February and due primarily to a 1.9% surge in energy, including a 2.8% increase in gasoline.

Countering the move was a 0.2% slide in services, the biggest move lower since March 2023, according to the BLS. Trade services prices fell 1.3% while margins for machinery and vehicles wholesaling tumbled 4.1%. An increase of 2.3% in portfolio management offset some of the decline in services prices.

https://www.cnbc.com/2024/08/13/producer-price-index-july-2024.html

Oil prices rose for a fifth consecutive session on Monday, extending gains from the previous week’s more than 3 per cent rise, as U.S. recession fears eased and Middle East supply risks provided support.

Brent crude futures were up 88 cents, or 1.1 per cent, at $80.54 a barrel by 1319 GMT while U.S. West Texas Intermediate crude futures rose $1.06, or 1.38 per cent, to $77.90.

“Support is coming from last week’s better than expected U.S. data, which eased fears of a U.S. recession,” said IG markets analyst Tony Sycamore.

“There is also a great deal of anxiety about when Iran might look to avenge Israel’s assassination of key Hamas and Hezbollah leaders. Feels like a matter of when, not if.”

Iran and Hezbollah have vowed to retaliate for the assassinations of Hamas leader Ismail Haniyeh and Hezbollah military commander Fuad Shukr.

“The market is still waiting for Iran’s response,” said Warren Patterson, ING’s head of commodities research.

In addition, the Israeli incursion into Gaza intensified on Saturday when an air strike on a school compound killed at least 90 people, according to the Gaza Civil Emergency Service, though Israel said the death toll was inflated. Hamas cast doubt on its participation in new ceasefire talks on Sunday.

Brent gained 3.7 per cent last week while WTI rose by 4.5 per cent, buoyed by economic data and increased hopes of a cut to U.S. interest rates.

Three U.S. central bankers said last week that inflation appeared to be cooling enough for the Federal Reserve to cut interest rates as soon as next month.

China’s consumer prices rose faster than expected in July, and U.S. weekly jobless claims fell more than expected last week.

On Monday Russia evacuated civilians from parts of a second region next to Ukraine after Kyiv increased military activity near the border only days after its biggest incursion into sovereign Russian territory since the start of the war in 2022.

Undermining price support, OPEC cut its forecast for global oil demand growth in 2024, citing weaker than expected data for the first half of the year and softer expectations for China. It also trimmed its expectations for next year.

Canada’s Tourmaline Oil TOU-T +3.04%increase said on Monday it will acquire Crew Energy in a $1.3-billion all-stock deal, which includes debt, to boost its presence in the Montney shale play in Alberta.

The shale formation, which spans northern Alberta and British Columbia, accounts for roughly half of Canada’s gas production, and is one of the country’s most attractive energy-producing regions due to its strong economics.

Crew Energy shareholders will receive 0.114802 Tourmaline shares for every share of Crew Energy held, valuing the deal at about $6.69 per Crew share, representing a premium of around 72 per cent over Friday’s closing prices.

The company said the acquisition, which is expected to close in early October, will add over $200-million to Tourmaline’s projected 2025 free cash flow.

The Crew assets are immediately adjacent to Tourmaline’s existing South Montney-operated complex.

The deal includes existing low decline average base production of 29,000-30,000 barrels of oil equivalent per day (boepd), and proved and probable reserves of 473.2 million barrels of oil, Tourmaline said.

The company said it has raised its average production outlook for the current year to 582,500-592,500 boepd from 575,000– 585,000 boepd if the deal closes as expected.

The Calgary-based company also authorized an increase in the quarterly dividend to 35 cents per share in the third quarter, from 33 cents per share.

 Barrick Gold Corp. reported its second-quarter profit rose compared with a year ago, helped by higher gold and copper prices.

The miner, which keeps its books in U.S. dollars, says it earned US$370 million or 21 cents US per diluted share for the quarter ended June 30, up from US$305 million or 17 cents US per diluted share a year earlier.

Revenue totalled US$3.16 billion, up from US$2.83 billion in the same quarter last year.

Barrick’s realized gold price for the quarter amounted to US$2,344 per ounce, up from US$1,972 a year ago, while its realized copper price was US$4.53 per pound, up from US$3.70 in the same quarter last year.

Gold production totalled 948,000 ounces for the quarter, down from 1,009,000 ounces a year earlier, while copper production amounted to 43,000 tonnes, down from 48,000 tonnes in the same quarter last year.

On an adjusted basis, Barrick says it earned 32 cents US per share in its latest quarter, up from an adjusted profit of 19 cents US per share.

This report by The Canadian Press was first published Aug. 12, 2024.