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Fuel retailer Parkland Corp. says its third-quarter earnings more than doubled in 2023 thanks to favourable market conditions and the company’s ongoing efforts to optimize its Burnaby refinery.

The Calgary-based company reported net earnings of $230 million, or $1.31 per share, for the three months ended Sept. 30, up from $105 million in the same period of 2022.

On an adjusted basis, Parkland earned $231 million, nearly five times its third-quarter 2022 adjusted earnings.

The company reported sales and operating revenue of $8.9 billion, down from $9.4 billion in the third quarter of last year.

Parkland’s Burnaby refinery delivered adjusted earnings of $188 million, up more than 39 per cent from the prior year’s quarter in part due to record refinery utilization and record co-processing volumes.

Parkland says it now expects to exceed its previously announced 2023 adjusted earnings guidance range of $1.8 to $1.85 billion, thanks to favourable refinery margins and strong utilization, as well as strength in its international business.

This report by The Canadian Press was first published Nov. 1, 2023

IGM Highlights

• Net earnings of $209.8 million or 88 cents per share compared to $216.1 million or 91 cents per share in 2022.
• Assets under management and advisement of $253.4 billion, down 3.0% from the prior quarter and up 6.4% from the third quarter of 2022. 
• IGM Financial’s assets under management and advisement including Strategic Investments were $400.0 billion as at September 30, 2023, compared with $402.8 billion at June 30, 2023 and $302.1 billion at September 30, 2022. This is a new measure introduced in the second quarter and reflects the importance of these high growth investments and their contribution to IGM’s value.
• Net outflows were $549 million compared to net outflows of $342 million in 2022.  

https://www.newswire.ca/news-releases/igm-financial-reports-third-quarter-earnings-816481127.html

North American main stock indexes rallied on Thursday on hopes that the U.S. Federal Reserve had reached the end of its tightening campaign, while a raft of upbeat corporate updates added to the bullish mood in both Canada and the U.S. If the gains hold, the Canadian benchmark stock index will have achieved its biggest daily gain in a year.

The Fed held interest rates steady on Wednesday as expected, and while Chair Jerome Powell left the door open to further tightening he also acknowledged the impact of a recent surge in bond yields on the economy.

The comments, which were perceived to be dovish, sent U.S. Treasury yields tumbling, with the benchmark 10-year yield hitting near three-week lows.

“Our base case is that the Fed is done, but that they will take time to cut rates,” said Raphael Olszyna-Marzys, international economist at J Safra Sarasin. “There’s a decent possibility that they will have to do more (hikes), but this is not how the market is seeing it for the moment.”

All three major U.S. stock indexes touched their highest level since Oct. 19.

Mega-cap growth stocks including Microsoft, Nvidia, Alphabet and Tesla rose between 0.2% and 3.9%.

All 11 major S&P 500 sectors were trading higher, with real estate and consumer discretionary leading gains.

Traders pared back the risk of a December hike to about 20% and a January move to 25%, according to the CME Group’s FedWatch tool. They have also priced in a 70% chance that the tightening is over.

Canada’s main stock index hit a two-week high, supported by upbeat earnings from e-commerce firms Shopify and Lightspeed along with jet maker Bombardier, while higher commodity prices also lifted sentiment.

At 10:13 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 308.55 points, or 1.62%, at 19,387.55.

The information technology index led sectoral gains, jumping 5.4% on upbeat earnings from Shopify and Lightspeed and was set to mark its biggest gain in nearly a year.

Shopify led the index, adding 19.7% after returning to profit in the third quarter and posting quarterly revenue above market expectations.

Software provider Lightspeed Commerce advanced 14.6% after the firm raised its annual revenue forecast.

Bombardier also reported third-quarter results that beat analysts’ estimates, helped by robust demand for pricier business jets and strength in its aftermarket business.

The jet maker moved 7.8% higher while the industrial index was up 1.1%.

The energy sector climbed 0.6% on higher oil prices as risk appetite returned to financial markets after the U.S. Federal Reserve kept benchmark interest rates on hold.

The materials sector, which includes precious and base metals miners and fertilizer companies, also rose 0.1% as prices of most non-ferrous metals, including copper and gold, gained on a pullback in the U.S. dollar and Treasury yields.

Meanwhile, First Quantum Minerals shares snapped a three-day losing streak to climb 3.8% higher amid uncertainty over the future of its key Panama copper mine.

On the U.S. earnings front, Qualcomm climbed 5.9% after the chip designer forecast first-quarter sales and profit above Wall Street estimates as a slowdown in smartphone sales eases.

PayPal advanced 3.9% as the payments giant raised its full-year adjusted profit forecast.

Starbucks jumped 9.4% after fourth-quarter results beat estimates, while data analytics firm Palantir Technologies rose 18.8% on forecasting quarterly revenue above estimates.

Moderna dropped 10.5% after lowering its 2023 COVID-19 vaccine sales forecast. Drugmaker Eli Lilly jumped 6.6% after beating quarterly sales estimates.

Apple’s shares advanced 1.2% ahead of its quarterly numbers due after markets close on Thursday.

At 9:38 a.m. ET, the Dow Jones Industrial Average was up 307.02 points, or 0.92%, at 33,581.60, the S&P 500 was up 51.87 points, or 1.22%, at 4,289.73, and the Nasdaq Composite was up 172.71 points, or 1.32%, at 13,234.18.

The Cboe Volatility index, also known as Wall Street’s fear gauge, touched a three-week low.

U.S. equities have kicked off November on a brighter note following a bruising October marred by fears of higher-for-longer interest rates and geopolitical tensions.

Meanwhile, data showed the number of Americans filing new claims for unemployment benefits increased moderately last week as the labor market continues to show few signs of a significant slowdown.

The main data point of the week will be the October non-farm payrolls report on Friday, which will offer more clarity on the state of the labor market.

Advancing issues outnumbered decliners by a 8.67-to-1 ratio on the NYSE and by a 4.50-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and six new lows, while the Nasdaq recorded 19 new highs and 47 new lows.

Reuters, Globe staff

Thomson Reuters Corp.TRI-T +2.02%increaseTRI-T +2.02%increase reported higher third-quarter revenue and kept its key financial targets for the year steady as the information and software provider prepares to roll out new artificial-intelligence tools in key products.

Revenue of US$1.59-billion increased 1 per cent in the quarter that ended Sept. 30, compared with a year earlier.

After accounting for lost revenue from several smaller asset sales over the past year, revenue was up 6 per cent, which was roughly in line with analysts’ expectations.

Major investments that Thomson Reuters are making to add new generative artificial-intelligence (AI) technology to its flagship products for clients are on the cusp of coming to market. An AI-powered research assistant will launch in the company’s Westlaw Precision product on Nov. 15, with further additions to other products expected in the coming months.

Chief executive officer Steve Hasker said generative AI will bring “seismic industry changes” to the sectors Thomson Reuters serves, and that the benefits to its customers from new tools based on the technology “really starts this quarter.” Thomson Reuters has said it will invest more than US$100-million annually in generative AI, but chief financial officer Mike Eastwood described that number as “the starting point,” and said the company is ready to increase it as necessary.

“We’re proceeding at breakneck speed in terms of integrating generative AI into our products,” Mr. Hasker said in an interview on Wednesday. Thomson Reuters expects to reap some new revenue in 2024, and predicts that will ramp up over a few years starting in 2025 as products are updated and contracts with clients renew.

The company’s overall revenue has been resilient in a fraught economic environment, bolstered by multiyear contracts that help guard against sudden fluctuations. Some corporate clients have seen discretionary spending budgets tighten and have been slower to sign up, while the Reuters Events business and digital advertising revenue from Reuters News have come under pressure.

The company’s largest division, which serves legal professionals, has seen some slowdown in work on capital markets transactions, offset by an uptick in litigation. Revenue from legal clients rose 2 per cent to US$688-million in the quarter, and was up 6 per cent excluding the impact of asset sales.

“Our legal business is continuing to power through,” Mr. Hasker said.

Revenue from corporate clients rose 4 per cent to US$391-million, while tax and accounting revenue increased 8 per cent to US$203-million.

Thomson Reuters is expecting a similar business environment marked by continued economic uncertainty next year, against the likely backdrop of two wars – Russia’s invasion of Ukraine, and Israel’s war with Hamas – as well as stubbornly high interest rates and a U.S. presidential election campaign.

“I think it would be foolhardy for us or anyone else to bank on a quick rebound,” Mr. Hasker told analysts on a conference call.

In the third quarter, Thomson Reuters reported profit of US$367-million or 80 US cents a share compared with US$228-million or 47 US cents in the same quarter last year.

After adjusting for one-time items, Thomson Reuters earned 82 US cents a share, well ahead of analysts’ expectations.

Woodbridge Co. Ltd., the Thomson family holding company and controlling shareholder of Thomson Reuters, also owns The Globe and Mail.

After Thomson Reuters sold US$1.5-billion of its stake in the London Stock Exchange Group in September, the company continues to have robust cash reserves, and announced a plan to buy back up to US$1-billion of its shares over the coming year. Thomson Reuters will also use some of its cash to pay off a maturing US$600-million bond.

Thomson Reuters also has capital available to make acquisitions and is looking primarily for smaller deals to bolster its existing business lines. “We don’t need or particularly want larger deals,” Mr. Hasker told analysts.

Nutrien NTR-T +0.78%increase fell short of analysts’ estimates for third-quarter profit on Wednesday, as lower potash prices weighed on the world’s biggest fertilizer producer.

Potash prices have been falling after shipments from Belarus and Russia resumed. These exports had been significantly restricted last year following Western sanctions imposed on Russia in response to its invasion of Ukraine.

Demand for fertilizers was also weak during much of the year, analysts have said, as farmers waited for prices to settle down.

Potash prices averaged $250 per tonne during the reported quarter, the company said, compared with $633 per tonne a year earlier.

The company’s U.S.-listed shares fell 3% after the bell.

Nutrien said potash sales volumes, however, climbed 23% on strong sales in North America.

Fertilizer inventories in the U.S. had been running low which should result in relatively robust demand, BofA Global Research analyst Steve Byrne had said ahead of the earnings.

On an adjusted basis, Nutrien reported earnings of 35 cents per share for the three months ended Sept. 30, compared with the average analyst estimate of 64 cents, according to LSEG data.

Nutrien, the top U.S. agricultural retailer, also narrowed its adjusted earnings forecast for 2023 to a range of $4.15 to $5.00 per share, compared with a range of $3.85 and $5.60 earlier.

The company forecast fourth-quarter fertilizer demand would be up 5% to 10% year-on-year.

Nutrien added it was lowering its nitrogen sales volume forecast due to the unplanned outages in the third quarter and pull-forward of a planned maintenance outage at its Borger site in the current quarter.

Published: 11/1/2023 3:19 PM ET

Oil futures failed to hold early gains and settled lower on Wednesday, weighed down by concerns that higher borrowing costs will likely hurt growth and the outlook for fuel demand.

The Federal Reserve today decided to leave interest rates unchanged at 5.25 to 5.5%, in an effort to support its dual goals of maximum employment and inflation at a rate of 2% over the longer run.

West Texas Intermediate Crude oil futures for December ended down $$0.58 or about 0.7% at $80.44 a barrel.

Brent crude futures were down $0.19 or about 0.22% at $84.83 a barrel a little while ago.

Data from U.S. Energy Information Administration (EIA) showed crude inventory in the U.S. rose by 0.774 million barrels in the week ended October 27, less than an expected increase of 1.3 million barrels.

Gasoline stockpiles increased by 0.1 million barrels last week, as against forecasts for a drop of about 0.8 million barrels, while distillate stockpiles fell by 0.8 million barrels in the week, against expectations for a 1.5 million-barrel drop, the EIA data showed.

The Fed’s accompanying statement was little changed from September, although the Fed did upgrade its assessment of U.S. economic activity.

The Fed said recent indicators suggest economic activity expanded at a “strong pace” in the third quarter after previously saying activity has been expanding at a “solid pace.”

The latest statement also said, “Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”

With regard to the outlook for rates, the statement suggests the Fed is still considering additional rate hikes in an effort to return inflation to its 2% objective.

The central bank said it will consider the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments in determining whether further increases may be appropriate.

Published: 11/1/2023 4:34 PM ET

The Canadian market ended on a firm note on Wednesday, rising for a third straight session, as some strong earnings updates helped underpin sentiment.

In addition to tracking earnings updates, investors also digested the Federal Reserve’s monetary policy announcement.

The benchmark S&P/TSX Composite Index, which climbed to 19,089.73 intraday, ended with a gain of 205.53 points or 1.09% at 19,079.00.

Utilities, real estate, communications, consumer staples, technology and healthcare stocks moved higher. Several stocks from energy, financials and industrials sectors too posted impressive gains. Materials shares were somewhat subdued.

The Utilities Capped Index climbed 3.69%. Brookfield Infra Partners (BIP.UN.TO) soared nearly 11%. Algonquin Power (AQN.TO), Innergex Renewable Energy (INE.TO) and Boralex Inc (BLX.TO) gained 4 to 5%.

The Real Estate Capped Index surged 2.43%. Allied Properties Real Estate Inv. Trust (AP.UN.TO), the biggest gainer in the index, rallied 5.3%. Northwest Healthcare Prop (NWH.UN.TO) and Choice Properties (CHP.UN.TO) both gained about 4.7%. Crombie Real Estate (CRR.UN.TO) and CT Real Estate (CRT.UN.TO) also posted sharp gains.

Rogers Communications (RCI.B.TO), BCE Inc (BCE.TO) and Telus Corp (T.TO) were among the prominent gainers in the communications sector.

Among consumer staples stocks, Empire Company (EMP.A.TO) and Weston George (WN.TO) gained 2.25% and 2.2%, respectively. Loblaw (L.TO) and Metro Inc (MRU.TO) also rallied sharply.

Technology stocks Dye & Durham (DND.TO) and Coveo Solutions (CVO.TO) climbed 7.8% and 5.3%, respectively. Computer Modeling Group (CMG.TO), Celestica Inc (CLS.TO), Shopify Inc (SHOP.TO), Enghouse Systems (ENGH.TO) and Constellation Software (CSU.TO) gained 1.7 to 3.4%.

Healthcare stock Bausch Health Companies (BHC.TO), energy stocks Topaz Energy (TPZ.TO), Secure Energy (SES.TO), Advantage Oil & Gas (AAV.TO), Athabasca Oil Corp (ATH.TO), Canadian Natural Resources (CNQ.TO) and Imperial Oil (IMO.TO), and financials shares Manulife Financial (MFC.TO), Onex Corp (ONEX.TO), Goeasy (GSY.TO) and Great-West Lifeco Inc (GWO.TO) also posted impressive gains.

On the economic front, a report from Markit Economics said the S&P Global Canada Manufacturing PMI edged higher to 48.6 in October of 2023 from 47.5 in the previous month, pointing to the sixth consecutive slowdown in Canadian manufacturing activity.

The Federal Reserve today decided to leave interest rates unchanged at 5.25 to 5.5%, in an effort to support its dual goals of maximum employment and inflation at a rate of 2% over the longer run.

The Fed said in its statement that recent indicators suggest economic activity expanded at a “strong pace” in the third quarter after previously saying activity has been expanding at a “solid pace.”

With regard to the outlook for rates, the statement suggests the Fed is still considering additional rate hikes in an effort to return inflation to its 2% objective.

The Federal Reserve on Wednesday held interest rates steady for the third time this year even as central bankers confront a surprisingly resilient economy and still too-high inflation.

The widely expected decision left interest rates unchanged at a range of 5.25% to 5.5%, the highest level in 22 years. But policymakers also left the door open to an additional increase before the end of the year amid concerns that inflation “remains elevated.” 

“In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” the Fed said in its post-meeting statement.

Policymakers have raised interest rates sharply over the past year, approving 11 rate increases in the hopes of crushing inflation and cooling the economy. In the span of just 16 months, interest rates surged from near zero to above 5%, the fastest pace of tightening since the 1980s.

Hiking interest rates tends to create higher rates on consumer and business loans, which then slows the economy by forcing employers to cut back on spending. Higher rates have helped push the average rate on 30-year mortgages above 8% for the first time in decades. Borrowing costs for everything from home equity lines of credit, auto loans and credit cards have also spiked.

Yet the rapid rise in rates has not stopped consumers from spending or businesses from hiring. 

“Inflation has been coming down, but it’s still running well above our 2% target. The labor market has been re-balancing, but it’s still very tight by many measures. GDP growth has been strong, although many forecasters are forecasting that it will slow,” Powell told reporters at a post-meeting press conference in Washington, D.C. “As for the committee, we are committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time. We are not confident we have achieved that.”

Inflation has cooled from a peak of 9.1%, but it remains well above both the Fed’s 2% goal and the pre-pandemic average. 

“The process of getting inflation sustainably down to 2% has a long way to go,” Powell added.

On top of that, economic growth unexpectedly accelerated last week, with gross domestic product — the broadest measure of goods and services produced in the country — rising at a 4.9% annualized rate from July through September. It marked the best gain since 2021.

nd against all odds, the labor market has remained very tight. Demand for workers continues to outstrip the number of jobs available, layoffs remain limited and the economy is still adding jobs at a solid clip. 

Fed officials acknowledged that economy activity was “strong” in the third quarter — an upgrade from the September meeting, when policymakers described a “solid” pace of growth. They also noted that job growth has “moderated,” in comparison to earlier statements that said it had “slowed.” In fact, Powell indicated that there is a greater risk of inflation re-accelerating than there is of an economic recession.

But policymakers also cautioned that tighter credit and financial conditions could weigh on the economy in coming months. Several officials, including Powell, have indicated that a recent run-up in long-term Treasury yields, which influence financing costs for households and businesses, could mean the Fed is done tightening. Powell said Wednesday the central bank remains “attentive” to the increase in longer-term yields.

“In light of the uncertainties and risks and how far we have come, the committee is proceeding carefully,” Powell said. “We will continue to make our decisions meeting by meeting.”

The Fed is set to meet one more time this year, in December.

Based on expectations of higher demand, U.S. natural gas prices have been on an upward trend since March when they bottomed out at US$1.99 per million British thermal units, or MMBtus, an industry standard.

Natural gas futures prices (December contract) are in the US$3.32 range. In Canada, prices on the Natural Gas Exchange in Alberta are at $2.55, also up from the summer months. (Alberta’s gas prices are based on NYMEX contract prices and have been discounted to reflect transportation costs, the province’s supply basin, foreign-exchange rates, and the conversion from MMBtu to gigajoules.)

Natural gas production – a quick background

The United States is the largest producer of natural gas globally, followed by Russia. Canada ranks fifth behind Iran and China, based on 2022 data. More than 95 per cent of the natural gas produced in Canada comes from Alberta and British Columbia. The combined production from the U.S. and Russia is more than the next 12 countries combined, and the U.S. produces almost twice as much natural gas as Russia. Russian gas production was down by 12 per cent in 2022. Current monthly production levels in both Canada and the U.S. are near historic highs.

Enbridge bets big on natural gas with $9.4-billion acquisition of three U.S. utilities

Natural gas consumption – a quick background

Data from the International Energy Agency, or IEA, show natural gas consumption in the U.S. is broken down as follows: electric utilities 38 per cent, industrial 32 per cent, residential 15 per cent, commercial 11 per cent, transport 4 per cent. In Canada, Statista.com breaks consumption down into 72 per cent industrial and power generation, 14 per cent residential, and 14 per cent commercial.

Recent natural gas price moves

Natural gas prices are very much driven by supply and demand. Supply discipline, industry consolidation and resistance to growing production to maximize free cash flow, coupled with the hot summer, have been reasons for the steady rise in natural gas prices this year, according to Eric Nuttall from Ninepoint Partners, in a recent BNN Bloomberg interview.

The accompanying chart shows how U.S. natural gas inventories build during the summer months (referred to as the refill season) and are drawn down through winter into spring. Canadian inventory levels follow the same pattern.

According to IEA estimates, working gas in storage was 3,700 billion cubic feet as of Oct. 20. Over the previous week, year and against the five-year average, stocks are up 74 Bcf, 313 Bcf and 183 Bcf, respectively. At 3,700 Bcf, the IEA states total working gas is within the five-year historical range.

The coming winter will have an impact on how quickly we draw down natural gas inventory and ultimately its impact on price.

The National Oceanic and Atmospheric Administration has a winter forecast of wetter in the south and warmer in the north, driven by a strengthening El Nino. In Canada, temperatures are expected to be at or above normal throughout most of the country this winter, according to Environment Canada and supported by the NOAA data. In the shorter term – one to two weeks – we can expect normal to above average temperatures in the western half of the continent and normal to below average temperatures for the eastern half.

Liquefied natural gas

Historically, natural gas was sold locally or distributed by pipeline to neighbouring markets. Liquefaction of natural gas into LNG allows the gas to be transported from producing regions to distant countries. (By cooling natural gas to minus 161 C, all hydrocarbons in it liquefy.) Over the next five years, the IEA sees North American LNG export capacity doubling to roughly 24 Bcf a day from the current 12 Bcf level.

New capacity is projected to come online in Mexico, Canada and the United States. As of the first half of 2023, the U.S. has exported 7.7 Bcf a day to Britain and the rest of Europe, representing 67 per cent of their exports. Canada does not currently have an LNG export facility, with the LNG Canada project being constructed in Kitimat, B.C., expected to deliver its first cargo to Asian markets in 2025.

Summary

Based on forecasts of higher demand, U.S. natural gas prices have increased 67 per cent this year off their lows in March, and Canadian prices are up 40 per cent from summer lows. Current inventory levels are at or above historic averages, production levels remain near historic highs, and the coming winter looks like it will have normal to above average temperatures, so we should expect natural gas prices to be near mid-term highs barring any extreme winter conditions.