A roundup of some of the North American equities making moves in both directions today
On the rise
Bank of Montreal (BMO-T) was higher after its second-quarter profit surged higher, driven by busy capital markets and abnormally low provisions for loan losses as the outlook for an economic recovery improves.
BMO’s adjusted profit reached nearly $2.1-billion in the quarter, excluding costs from two recent deals. That compared with $715-million a year ago, when the bank’s returns reached a nadir in the early months of the coronavirus pandemic. Adjusted profit increased 2.8 per cent when compared with the first three months of the 2021 fiscal year.
One of the largest factors spurring the stronger results was a plunge in provisions for credit losses - the money banks set aside to cover loans that may default. BMO set aside just $60-million in the quarter - $155-million to cover loans that are past due, offset by a recovery of $95-million that had previously been set aside against that were still current, based on improving economic forecasts. In the second fiscal quarter last year, BMO set aside $1.12-billion to build its reserves against the crisis created by COVID-19.
In the three months that ended April 30, BMO earned $1.3-billion, or $1.91 per share, compared with $689-million, or $1.00 per share, in the same quarter last year. Profits were reduced by $772-million in charges related to the sale of the bank’s European asset management arm and its private banking business in Hong Kong and Singapore.
Adjusted to exclude those charges and other items, BMO said it earned $3.13 per share. On average, analysts expected adjusted earnings per share of $2.82, according to Refinitiv.
- James Bradshaw
Canadian National Railway (CNR-T) was higher after it said on Wednesday it would divest Kansas City Southern’s (KSU-N) 70-mile rail line between New Orleans and Baton Rouge to eliminate the only overlap between the two railroad operators.
The line is less than 0.7 per cent of the about 27,000 route-miles the two companies operate, the Canadian operator said.
“Our early commitment to eliminating the minimal rail overlap and to laying out the case for a CN-KCS combination should allow the STB (Surface Transportation Board) to approve our voting trust,” Canadian National Chief Executive Officer Jean-Jacques Ruest said.
“A trust is an essential step so KCS shareholders can receive the full value of their shares.”
Canadian National and Kansas City said they have together filed a renewed motion for approval of their voting trust with the STB to advance the merger deal.
The U.S. railroad earlier this month accepted Canadian National’s US$33.6-billion offer, upending a US$29-billion deal with its competitor Canadian Pacific (CP-T), and last week reiterated that Canadian National Railway’s offer was “superior.”
Suncor Energy Inc. (SU-T) increased after saying Wednesday it is aiming for net-zero greenhouse gas emissions by 2050, as cash-rich oil sands firms come under pressure to meet the country’s goal on energy transition.
Suncor, which had previously set a target of a 30 per cent cut to emission intensity by 2030, said it was expecting to reduce emissions by 10 megatonnes (MT) per year across its operations during that period.
Prime Minister Justin Trudeau has set a goal of net-zero emissions for the country by 2050 as part of a global push for action on climate change.
The company also said it would focus its planned $5-billion annual capital spend through 2025 on reducing costs and improving “carbon competitiveness”.
It plans to invest in its low-carbon businesses, which are expected to deliver an annual $2-billion of incremental free funds flow by 2025.
Oil and gas producers, also under pressure from investors wanting to see the industry embrace greener options, have announced new emissions targets this year amid a cut in spending and production following a coronavirus-driven plunge in crude prices.
Suncor earlier this month said it would partner with utility ATCO Ltd. (ACO.X-T) to develop a clean hydrogen project near Fort Saskatchewan, Alberta, in one of the most significant steps taken by an oil sands producer to cut greenhouse gas emissions.
The succession, effective on May 27, comes as the leisure airline remains grounded during the pandemic and follows the failed sale of the company to Air Canada.
Ms. Guérard has been Transat’s chief operating officer since 2017. She began her career at the Montreal-based travel and airline company in 2002 as a director of strategy and customer service. Previously, she was a consultant in operations management and logistics with a civil engineering degree from Polytechnique Montreal, according to her LinkedIn profile.
Ms. Guérard takes charge of the company as it prepares to restart service in June. Transat recently received a bailout package from the federal government worth as much as $700-million. The aid will allow Transat to provide customer refunds and stay afloat while offering the government the chance to buy up to 20 per cent of the company.
- Eric Atkins
Ivanhoe Mines Ltd. (IVN-T) rose after announcing with joint venture partner Zijin Mining that the Kamoa-Kakula mine in Democratic Republic of Congo started producing copper concentrate on Tuesday, several months ahead of schedule as copper prices soar.
“The start of production of copper concentrate at the Kamoa-Kakula Mine indicates that the DRC is open for business and investment,” said Congolese President Felix Tshisekedi.
Ivanhoe expects Kamoa-Kakula to ramp up this year and produce 80,000 to 95,000 tonnes of copper in concentrate. After several phases of expansion the mine’s peak annual copper production will be more than 800,000 tonnes.
Ivanhoe has said it expects Kakula to be the world’s highest-grade major copper mine, with the concentrator producing concentrate grading around 57-per-cent copper.
The company said it would provide an update on phase 1 copper concentrate off-take arrangements “in the near term”.
Given record-high copper prices, Ivanhoe and Zijin are looking to accelerate the expansion of the phase 3 concentrator.
Kamoa-Kakula is owned by Ivanhoe (39.6 per cent), Zijin Mining Group (39.6 per cent), Crystal River Global Limied (0.8 per cent) and the Congolese government (20 per cent).
Ford Motor Co. (F-N) was up on Wednesday after it outlined plans to boost spending on its electrification efforts by more than a third and said it aims to have 40 per cent of its global volume be all electric by 2030 in a move to step up its push on EVs.
Under a plan dubbed “Ford+,” the No. 2 U.S. automaker said it now expects to spend more than US$30-billion on electrification, including battery development, by 2030, up from its prior target of US$22-billion. It has launched the all-electric Mustang Mach-E crossover, and plans to introduce electric versions of the Transit van and F-150 pickup.
“This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T,” Ford Chief Executive Jim Farley said in a statement.
Ford and other global automakers are racing to shift their gasoline-powered lineups to all electric power under pressure from regions like Europe and China to cut vehicle emissions. Ford rival General Motors Co (GM-N) has said it aspires to halt U.S. sales of gasoline-powered passenger vehicles by 2035.
Amazon (AMZN-Q) saw gains after it said on Wednesday it is buying MGM, the fabled U.S. movie studio home to the James Bond franchise, for US$8.45-billion, giving it a huge library of films and TV shows and ramping up competition with streaming rivals led by Netflix (NFLX-Q) and Disney+ (DIS-N).
Privately held MGM, or Metro Goldwyn Mayer, was founded in 1924, and also owns the Epix cable channel and makes popular TV shows including Fargo, Vikings and Shark Tank.
“The real financial value behind this deal is the treasure trove of IP in the deep catalog that we plan to reimagine and develop together with MGM’s talented team. It’s very exciting and provides so many opportunities for high-quality storytelling,” said Mike Hopkins, senior vice president of Prime Video and Amazon Studios.
Amazon’s Prime Video faces a long list of competitors including Netflix Inc, Walt Disney Co’s Disney+ , HBO Max and Apple Inc’s Apple TV+. The companies are increasing spending and expanding in international markets, aiming to capture the pandemic-led shift to binge-watching shows online.
The proliferating streaming services are also scrambling for brands that they can expand and libraries of older shows and movies. Analysts have said this is a big motivation for another round of consolidation of media properties after a brief hiatus during the pandemic.
Underscoring the trend, AT&T Inc. (T-N) announced a US$43-billion deal last week to spin out its WarnerMedia business and combine it with Discovery Inc, one of the most ambitious yet in the streaming era.
Capri Holdings Ltd (CPRI-N), formerly Michael Kors Holdings Ltd., was higher in the wake of forecasting annual revenue and profit above Wall Street expectations, betting on shoppers returning to stores in the United States following speedy vaccinations and pent-up demand for luxury goods in Europe.
Demand for luxury apparel and bags have rebounded as people resume traveling and begin to socialize after being stuck at home for more than a year, while a big stimulus program in the United States is expected to boost spending in the first half of the year.
“We remain optimistic about the outlook for the fashion luxury industry and Capri Holdings,” Chief Executive Officer John Idol said in a statement.
The company forecast revenue of about US$5.1-billion for its fiscal 2022. Analysts were expecting US$4.99-billion, according to IBES data from Refinitiv.
Capri reported revenue of US$4.06-billion for fiscal 2021, compared with the US$5.55-billion before the pandemic.
Capri, which also owns Jimmy Choo and Versace, said e-commerce sales rose 80 per cent in the fourth quarter, helping it beat total revenue estimates. Retail sales increased 13 per cent from a year earlier, the company said.
It expects to earn about US$3.70 to US$3.80 per share, largely above the projection of US$3.72.
Fourth-quarter revenue of US$1.20-billion beat expectations of US$1.02 billion. On an adjusted basis, the company earned 38 US cents per share, surpassing the estimate of 2 US cents.
The company also reinstated its share repurchase program, which has US$400-million remaining.
Abercrombie & Fitch Co. (ANF-N) reported a bigger-than-expected 61-per-cent jump in first-quarter sales on Wednesday, as the apparel retailer benefited from shoppers returning to stores and its beefed up online business.
Shares rose as the company also posted a surprise quarterly profit and said that the momentum had extended into the current quarter.
Online sales accounted for about half of overall first-quarter revenue as the company’s investments to offer services such as curbside pickup during the health crisis paid off.
Sales at Abercrombie’s brand Hollister, which accounted for 57% of total, jumped 62 per cent in the quarter ended May 1.
The company also said early reaction “has been amazing” to its Social Tourist brand, launched in partnership with TikTok influencers Charli and Dixie D’Amelio.
The company is targeting young shoppers ahead of the back-to-school selling season through the brand.
Overall net sales rose 61 per cent to US$781.4-million in the first quarter, beating analysts’ estimates of US$687.4-million, according to IBES data from Refinitiv.
Excluding items, the company earned 67 US cents per share, while analysts on average were expecting a loss of 38 US cents, helped by lesser discounting.
On the decline
The Edmonton-based cannabis company says transferring the listing to the Nasdaq is part of Aurora’s recently announced cost efficiency plan.
Under the plan, the company has spent much of the COVID-19 pandemic laying off workers and closing facilities in hopes of finding millions in savings.
Aurora says its stock stopped trading on the NYSE on Monday after the market closed and its new listing on the Nasdaq is under its previous ACB ticker.
The company says the transfer does not impact the company’s primary listing on the Toronto Stock Exchange.
Nordstrom Inc. (JWN-N) posted a bigger-than-expected quarterly loss on Tuesday after the bell, hurt by price markdowns the department store chain had to initiate due to excess holiday inventory and increasing competition in the retail sector.
The retailer’s shares, which have gained 17 per cent this year, fell, as first-quarter sales declined 13% from 2019. In contrast, rival apparel retailer Urban Outfitters Inc reported a 7.3-per-cent rise in net sales for the same period.
The drop in sales showed Nordstrom was not recovering as quickly as rivals even as the roll out of vaccines and the arrival of stimulus checks in March boosted consumer spending confidence, analysts said.
“This underlines the fact that Nordstrom has nowhere near dug itself out of the hole it fell into at the start of last year – despite the fact this was a boom quarter for the retail sector overall,” Neil Saunders, managing director of GlobalData, said.
Late arrival of products during last year’s holiday season led to a glut of out-of-fashion products, forcing Nordstrom to take steps including making returns to vendors and marking down prices in the first quarter to clear excess inventory.
Higher labour and shipping costs, as well as supply constraints in the apparel industry, are also pressuring Nordstrom’s margins, Nordstrom Chief Financial Officer Anne Bramman said.
The company reiterated its full-year revenue forecast of an over 25-per-cent increase, while rivals Macy’s Inc. (M-N) and Kohl’s Corp. (KSS-N) beat first-quarter sales estimates and raised full-year forecasts last week.
The company reported a net loss of US$166-million, or US$1.05 per share in the quarter ended May 1, compared with estimates of a loss of 57 US cents per share, according to IBES data from Refinitiv.
Chinese e-commerce platform Pinduoduo Inc.’s (PDD-Q) quarterly revenue beat Wall Street estimates on Wednesday, driven by a sustained surge in online shopping following the COVID-19 pandemic.
The shares were narrowly lower after dropping nearly 40 per cent from its high this year.
Total revenue more than tripled to 22.17 billion yuan (US$3.47-billion) in the first quarter, boosted by Pinduoduo’s online marketing services revenue. Analysts on average had expected revenue of 20.2 billion yuan, according to IBES data from Refinitiv.
Active buyers on Pinduoduo in the 12-month period ended March rose 31 per cent to about 824 million, outpacing Alibaba’s 811 million.
Pinduoduo has led China’s adoption of social e-commerce, which melds online shopping with social media and where buyers can reap greater discounts when shopping in bigger groups. That has helped the Shanghai-based company challenge bigger rivals Alibaba (BABA-N) and JD.com (JD-Q).
“Our growing scale gives us both greater capacity as well as responsibility to live up to our mission to ‘benefit all’,” Chen Lei, chairman and chief executive of the company said in a statement, adding that it was the company’s goal to become the world’s largest agriculture and grocery platform.
With files from staff and wires