On the rise
Shares of Sun Life Financial Inc. (SLF-T), Canada’s second-biggest life insurer, rose 3.1 per cent on Thursday after it posted third-quarter profit that beat analyst estimates, as higher insurance sales in the United States and Asia helped offset declining revenue from its wealth management business.
Underlying profit rose 5 per cent from a year ago to $949-million or $1.62 per share in the three months ending Sept 30 versus consensus estimates to $1.47.
“Overall insurance sales across our businesses were strong, reflecting the increased importance clients are placing on protection and health,” Kevin Strain, Sun Life CEO and president, said in a statement.
Market volatility sparked by sharp rise in interest rates globally dented Sun Life’s wealth business, resulting in a 19-per-cent drop in core profit from that operation. Total assets under management fell 8 per cent to $1.28-trillion from a year ago.
Reported profit, which captures market fluctuations, slumped 54 per cent to $466-million.
Sun Life has been expanding overseas to diversify its business mix and the latest quarter earnings benefited from recent deals, Strain added.
Core income from U.S. operations nearly doubled to $216-million and Strain said the performance was boosted by the acquisition of DentaQuest, which Sun Life bought last year for $2.48-billion.
Peer Great-West Lifeco Inc. (GWO-T) was lower after its third-quarter results missed expectations. Base earnings per share of 74 cents missed the Street’s forecast by 5 cents.
“It is hard to label a 7-per-cent EPS miss to the Street as anything other than a negative result, especially when it is driven by a 7 per cent year-over-year decline in Expected Profit,” said Scotia Capital analyst Meny Grauman. “That said, peel back the layers and this earnings release continues to highlight the resiliency of the platform in the face of a number of challenges including falling equity markets and a significant deprecation in the euro and pound. Key positives in this report include a stable LICAT ratio (up 1 point quarter-over-quarter to 118 per cent), a smaller net outflow of AUM at Putnam, and relatively stable year-over-year earnings in Europe on a constant currency basis. Credit experience also remains positive for the time being, and we highlight a better-than-expected result out of the U.S., helped by a sequential decline in expenses after a step up in Q2.
“Overall, these numbers continue to show the power of diversification at Great-West Life, but investors are also likely to continue to take a wait-and-see approach to Empower despite the successful integration of MassMutual, and remain uncertain about the outlook for the firm’s European unit in the face of darkening economic clouds.”
Suncor Energy Inc. (SU-T) jumped almost 4 per cent after it reported late Wednesday its third-quarter adjusted profit more than doubled and beat analysts’ expectations, as the Canadian energy major was supported by higher oil and refined product prices.
Global crude prices have recently cooled from 14-year peaks touched earlier in 2022, but were still 30 per cent higher year-on-year during the quarter as Russian sanctions and OPEC+ lower output plans kept supply tight.
Suncor is going back to its roots as a pure oil sands company
Excluding items, Suncor’s adjusted earnings more than doubled to $2.57-billion, or $1.88 per share, beating analysts’ consensus of $1.83 per share, as per Refinitiv data.
Total upstream production for the reported quarter was 724,100 barrels of oil equivalent per day (boepd), compared with last year’s 698,600 boepd.
Its refinery crude throughput rose 1.4 per cent to 466,600 barrels a day with a refinery utilization of 100%.
Last week, Suncor had said it will buy Canadian miner Teck Resources’ (TECK.B-T) stake in the Fort Hills oil sands project in Alberta for $1-billion, expanding its stake in the project to 75.4 per cent from 54.1 per cent.
Before the stake expansion, the Calgary-based firm took an impairment charge of nearly $3.4-billion in the reported period against its share of the Fort Hills assets.
Canadian Natural Resources Ltd. (CNQ-T) increased as it raised its dividend by 13 per cent on Thursday after beating analysts’ estimates for quarterly profit on the back of higher crude prices.
Energy supplies have remained tight due to disruption from the Ukraine war, pushing crude prices to multi-year highs. This has helped oil and gas companies including rivals Imperial Oil Ltd and Cenovus Energy Inc post higher profits.
Canadian Natural said its liquids realized price rose nearly 25 per cent to $84.91 per barrel.
The Calgary-based company raised its quarterly dividend to 85 cents, as energy companies focus on returning the excess profit to shareholders.
With this, the company has raised its quarterly dividend twice so far this year for a total combined increase of 45 per cent to $3.40 per share annually.
Canadian Natural said its 2022 capital budget program remains unchanged at about $4.9-billion.
Production rose to 1.34 million barrels of oil equivalent per day (boepd) in the September quarter from 1.24 million boepd a year earlier.
Net earnings rose to $2.81-billion, or $2.49 per share, in the three months ended Sept. 30, from $2.20-billion, or $1.86 per share, a year ago.
On an adjusted basis, the company earned $3.09 a share, beating the average analysts’ estimate of $2.85 per share, according to Refinitiv data.
With sales at Tim Hortons restaurants continuing to rebound compared to prepandemic levels, parent company Restaurant Brands International Inc. (QSR-T) was up after it reported on Thursday as its sales and profit grew in the third quarter.
The Toronto-based fast-food company, which also owns Burger King, Popeyes Louisiana Kitchen and Firehouse Subs, reported that net income grew by 61 per cent in the three months ended Sept. 30, to US$530-million or US$1.18 per share, compared to US$329-million or 71 US cents per share in the same period the prior year. Earnings growth included the impact of an income tax benefit this year, as well as growing profits at Tim Hortons and Burger King.
Revenue grew by 15.5 per cent to US$1.73-billion in the third quarter.
Tim Hortons has been working on a turnaround plan for some time, adding new menu items and improving food and beverage quality. Comparable sales at the coffee chain – an important metric that measures sales growth not accounted for by new store openings – were up 9.8 per cent, including 11.1 per cent growth in Canada.
Burger King’s same-store sales grew by 10.3 per cent, but growth was slower in the U.S. at 4 per cent, where the chain has been trailing competitors McDonald’s and Wendy’s. In September, the company also announced a two-year, US$400-million plan to improve its U.S. results, boosting advertising spending and renovating outdated locations.
- Susan Krashinsky Robertson
Vancouver-based Lithium Americas Corp. (LAC-T) rose after it said on Thursday it is splitting itself in two, a step designed to jumpstart development of its flagship North American mine while giving partner Ganfeng Lithium Co Ltd wider berth to develop South American lithium projects.
The move, which had been expected, comes as the company’s Thacker Pass lithium project in Nevada has yet to sign supply deals with electric vehicle makers even as nearby rivals ioneer Ltd and others have inked multiple supply contracts.
While the Thacker Pass project is mired in legal proceedings, the affiliation with China-based Ganfeng had likely raised concerns among some automakers and may have posed an impediment to garnering U.S. government financial support, analysts said.
“A number of the parties looking at Thacker Pass are keenly focused on having a North American focused supply chain,” said Canaccord Genuity Capital Markets analyst Katie Lachapelle.
The split, which was approved by the Lithium Americas board on Tuesday, will separate the North American and Argentine businesses into two independent companies each publicly listed in Toronto and New York by the end of next year.
Shareholders will receive shares in both companies commensurate to their existing holdings.
“We believe the value of these assets can be overshadowed by each other,” Chief Executive Jon Evans told Reuters. “The split allows management teams to focus on unique challenges facing each of these assets.”
Bombardier Inc. (BBD.B-T) soared 6.7 per cent after saying it continues to pull in new jet orders at a strong pace as it reported better-than-expected results for its latest quarter.
The backlog of planes sold but not yet delivered grew by US$300-million during the three month period ended Sept.30, the Montreal-based company said Thursday. It now stands at US$15-billion, a level not seen in six years.
After years of turmoil at Bombardier that saw it teeter on the verge of bankruptcy, Chief Executive Eric Martel is trying to stage a recovery for the industrial giant that hinges on a slimmed-down business model focused solely on selling and servicing private jets. The company on Thursday maintained its previous financial guidance, saying it remains on track to ship 120 jets this year.
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Bombardier and its rivals are riding a surge in demand for private air travel during the COVID-19 pandemic, which has lured business travellers out of commercial airliners and into private jets. Airlines drastically scaled back available flights during the health crisis, pushing individuals to consider private flying options. More recently, passenger congestion at airports has also contributed to the trend.
The plane maker reported a net profit of US$27-million or 20 cents per share for its latest quarter, reversing a loss of US$376-million or $3.97 per share during the same period last year. Analysts had forecasted a loss of 53 cents per share on average. Revenue came in at US$1.5-billion as Bombardier boosted its sales from servicing and maintaining jets by 20 per cent.
Adjusted earnings before interest, taxes, depreciation and amortization – a measure Bombardier says excludes the effects of items that are usually associated with investing or financing activities and items that do not reflect its core performance – climbed to US$210-million, a 48 per cent improvement year-over-year. The company tallied positive free cash flow of US$52-million.
- Nicolas Van Praet
BCE Inc. (BCE-T) reversed early declines and closed up 0.4 per cent after reported its third-quarter profit edged lower compared with a year ago as its revenue rose, helped by growth in its wireless and home internet operations.
The company reported net income attributable to common shareholders of $715-million or 78 cents per share for the quarter ended Sept. 30, down from a profit of $757-million or 83 cents per share in the third quarter of 2021.
Operating revenue totalled $6.02-billion, up from nearly $5.84-billion in the same quarter last year.
The growth came as the company’s wireless business saw its operating revenue gain 7.4 per cent compared with a year ago, while wireline operating revenue rose 1.0 per cent. Bell’s media operating revenue was unchanged as higher subscriber revenue was offset by lower year-over-year advertising revenue.
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On an adjusted basis, BCE says it earned 88 cents per share in its latest quarter, up from an adjusted profit of 82 cents per share in the same quarter last year.
Analysts on average had expected a profit of 84 cents per share and $6.02-billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.
On the decline
Barrick Gold Corp. (ABX-T) shares hit their lowest level since March 2020 on Thursday after the world’s second-biggest gold miner reported a 30.1-per-cent drop in third-quarter profit due to weak production and higher costs.
The Toronto-based miner said it now expects to exceed its previous gold cost guidance for the year, as all-in sustaining costs (AISC), an industry metric that reflects total expenses, rose to US$1,269 per ounce, a 22.7-per-cent increase on the September quarter last year.
Toronto-listed shares were on track for their biggest one-day drop in two years.
The cost increase was largely down to a 9-per-cent fall in gold production from 1.09 million ounces to 988,000 ounces, CEO Mark Bristow told Reuters in an interview.
“Of course we’ve got cost pressures everywhere,” Bristow said, adding that the worst-affected mines were Carlin and Cortez in Nevada, and Veladero in Argentina.
All-in sustaining costs for copper also rose, to US$3.13 per pound from US$2.60 per pound. Copper production increased, however, to 123 million pounds from 100 million pounds.
Barrick remains on track to achieve its 2022 production guidance, Mr. Bristow said in a statement. The miner however said production at both Turquoise Ridge in Nevada and Hemlo in Canada is expected to be below the 2022 guidance range.
Barrick’s net earnings fell to $241-million, or 14 cents per share, in the quarter ended Sept. 30, from $347-million, or 20 cents per share, a year earlier.
Gold prices declined 8-per-cent during the third quarter as global central banks raised interest rates to battle surging inflation. Barrick’s average realized price for gold fell 2.8 per cent to US$1,722 per ounce from a year earlier, the company said.
Larger rival Newmont Corp. (NGT-T) on Tuesday reported a 56-per-cent drop in quarterly profit, largely due to lower gold sales volumes and higher labor, energy and raw materials costs.
Nutrien Ltd. (NTR-T) cut its full-year adjusted earnings forecast for the second time this year as potash prices decline, sending the shares of the world’s biggest fertilizer maker down almost 14 per cent in Thursday’s trading.
The company also missed third-quarter profit estimates, hurt by cooling prices of crop nutrients as farmers cut fertilizer application to rein in costs, and rising costs of natural gas, which is used as a feedstock to make nitrogen fertilizers.
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The company cut global potash shipment forecast to between 60 million tons (mt) and 62 mt for 2022, from 61 mt and 64 mt, blaming higher-than-expected inventory and lower purchases in North America and Brazil during the second half of the year.
However, it expects higher potash consumption next year.
“Pent-up demand will emerge as inventories are drawn down and prices stabilize,” the company said in a statement.
Its comments echo those of smaller rival CF Industries Holdings Inc, which said on Wednesday it expects global nitrogen supply shortfalls to persist in 2025 on robust agricultural demand as well as higher energy prices in Europe and Asia.
“During the third quarter of 2022, an estimated 60% of ammonia capacity in Europe did not operate,” CF said, referring to curtailments in ammonia production due to high natural gas prices.
Global grain stocks will take at least two more seasons to be replenished, it added.
Nutrien now expects adjusted earnings for 2022 to be in the range of US$13.25 to US$14.50 per share, compared with its previous forecast of US$15.80 to US$17.80 a share.
Excluding items, Nutrien earned US$2.51 a share, missing analysts’ average estimate of US$3.97, while CF Industries’ adjusted earnings of US$2.27 per share also missed consensus of US$3.33, according to Refinitiv data
Quebecor Inc. (QBR.B-T) ended down almost 0.9 per cent following largely in-line third-quarter results.
Before the bell, it reported revenue and EBITDA of $1.14-billion and $518-million, respectively, meeting the Street’s forecast of $1.15-billion and $517-million. Adjusted earnings per share of 75 cents beat the consensus by a penny.
Quebecor says adjusted cash flows from operations for the telecommunications segment increased by $44.3 million in the quarter compared to a year ago.
Quebecor’s subsidiary Videotron Ltd. increased its revenues from mobile services and equipment by $30.7 million and from internet access by $13.6-million in the quarter. The increase in internet access revenues was due in part to the acquisition of VMedia Inc.
President and CEO of Quebecor Pierre Karl Peladeau says the company is making every effort to become the fourth major wireless and internet service provider across Canada and remains committed to closing the acquisition of wireless carrier Freedom Mobile.
On Aug. 12 Quebecor’s Videotron subsidiary entered a definitive agreement with Rogers Communications Inc. and Shaw Communications Inc. to acquire Freedom Mobile for a total amount of $2.85 billion on a cash-free, debt-free basis. The deal is subject to regulatory approval.
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In a research note, Desjardins Securities analyst Jerome Dubreuil said: “Earlier this morning, QBR reported results which were broadly in line with expectations, with subscriber numbers slightly better than anticipated (stronger in cable, in line in wireless). With regard to the potential Freedom acquisition, no material update was provided in today’s release. Investors are still waiting for further details on management’s financial goals in relation to the potential deal, which could eventually be a catalyst in our view. We note that QBR has continued to buy back its shares in recent months despite its pending takeover of Freedom.”
Spin Master Corp. (TOY-T) plummeted in the wake of reporting weaker-than-anticipated third-quarter results and reducing its full-year guidance after the bell on Wednesday.
The Toronto-based toymaker announced revenue of $624-million, down 10 per cent year-over-year on a constant currency basis and below the Street’s expectations. Adjusted EBITDA dropped 22.9 per cent to $168-million, below the consensus estimate of $170-million.
Spin Master now expects revenue to rise in 2022 at low single digits year-over-year versus its previous expectation of low double digits.
“The downward guidance revision reflects ‘challenging macroeconomic factors affecting consumers’ according to the company,” said Stifel analyst Martin Landry. “The revised guidance suggests that Q4 EBITDA could be below $40-million (down 40-50 per cent year-over-year) and lower than our expectations of $61 million and consensus of $58 million. The magnitude of the guidance revision may disappoint investors, despite the fact that TOY shares were already down 10 per cent in the last 5 trading sessions.”
With the news, an analyst at National Bank downgraded the company’s shares.
Montreal’s Lightspeed Commerce Inc. (LSPD-T) dropped after it reported a loss of US$79.9-million in its latest quarter as its revenue rose 38 per cent.
The software company says its loss amounted to 53 US cents per diluted share for the quarter ended Sept. 30 compared with a loss of US$59.1-million or 43 US cents per share in the same quarter last year.
Revenue in what was the second quarter of the company’s financial year totalled US$183.7-million, up from US$133.2-million a year earlier.
The increase came as subscription revenue rose to US$74.5-million compared with US$59.4-million a year ago, while transaction based revenue totalled US$101.3-million, up from US$65.0-million in the same quarter a year earlier.
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Hardware and other revenue was US$7.9-million, down from US$8.8-million.
On an adjusted basis, Lightspeed says it lost 5 US cents per share in its latest quarter compared with an adjusted loss of 8 US cents per share in the same quarter last year.
Equinox Gold Corp. (EQX-T) crashed after it reported a bigger-than-expected quarterly loss.
“We view the Q3/22 financial results as a negative for EQX shares, while we believe investors will be encouraged by the Greenstone project remaining on budget and schedule, higher realized costs at other portfolio assets could reduce cash flow generation in the context of the current gold price environment, said Scotia Capital’s Ovais Habib.
With files from staff and wires
David Leeder