These are stories Report on Business is following Thursday, May 12. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Don't underestimate Clement The oil industry should pay close attention to Tony Clement. This industry minister is not one to be trifled with, and he's not afraid to act.
Disputes between governments and Big Oil have oft been little more than sound and fury, to borrow from Shakespeare, but Mr. Clement has demonstrated more than once that he'll go where more timid types might not, though it's not exactly clear what Ottawa could or would do about high gas prices.
Mr. Clement, remember, publicly shot down his own CRTC chief on the issue of usage-based billing for Internet service, he rejected BHP Billiton's hostile takeover of Potash Corp. of Saskatchewan, and he stepped in to boost wireless competition in Canada.
The Industry Minister announced today that he plans Parliamentary hearings on gasoline prices, having heard the "concerns" of consumers, The Globe and Mail's Richard Blackwell reports.
"No one can understand why last year, when oil per barrel was around $140 or $150, we were paying $1.37 per litre, when this year oil is south of $98 a barrel and yet we're paying more," Mr. Clement told reporters, at a news conference fittingly held outside a family home.
(Mr. Clement knows how to get air time and stand up for the people.)
Earlier, in a statement, he said that "everyone is feeling the pinch at the pumps" and warned that he has the power to refer matters to the Competition Bureau, which has looked at this issue before, but found no evidence on a national basis of anti-competitive behaviour.
"I should note that this is not the first action the Harper government has taken on this issue. We passed the Fairness at the Pumps Act to ensure that consumers are getting what they pay for when they fill up. We have expanded the powers of the Commissioner of Competition, who broke up a significant price-fixing cartel in Quebec last year."
Mr. Clement's comments today came as Big Oil was on the hot seat in Washington, where the U.S. Senate Finance Committee pulled in the chiefs of several companies, Globe and Mail correspondent Kevin Carmichael reports.
Executives of Exxon Mobil Corp. , ConocoPhillips , Chevron Corp. , and the American operations of Royal Dutch Shell PLC and BP PLC were testifying amid calls in some quarters to kill sector subsidies.
"Businesses should make a profit -- that's what drives our economy -- but do these very profitable companies actually need taxpayer subsidies?" said committee chairman Max Baucus, a Democrat. "We can put this money to better use -- and we should."
In response, the oil chiefs said higher taxes could lead to higher prices and job cuts.
"Raising taxes will lead to less investment, less production and most likely higher cost per gallon and less employment," said James Mulva, the chief of ConocoPhillips.
- Ottawa to grill gas industry over prices
- Big Oil hearings great political theatre
- Will we get relief from gas prices?
- The Central Canada gas price puzzle
Tim Horton profit climbs, stock sinks Tim Hortons Inc. profit jumped in the first quarter as same-store sales, a key measure, climbed, but its stock sank after missing analysts' expectations.
The coffee and doughnut chain earned $80.7-million or 48 cents a share, diluted, in the quarter, up from $78.9-million or 45 cents a year earlier. Analysts had expected 51 cents in the latest quarter.
Revenue climbed more than 10 per cent to $643.5-million.
"We continue to believe we are on track to achieve our 2011 targeted diluted earnings-per-share range of $2.30 per share to $2.40 per share, absent any significant deterioration in economic conditions," the company said.
Tim Hortons missed estimates partly because it no longer has the revenues from Maidstone Bakers. But the iconic chain also cited the impact of much prize redemptions from its Roll Up the Rim to Win program, and poor weather in some regions.
"Our Canadian same-store sales growth was notable given the sales impact of significantly increased redemptions of higher food and beverage prizes as part of our investment in the 25th anniversary of the Roll Up the Rim to Win promotion and the effect of heavy snowfalls in key markets," said chief executive officer Don Schroeder.
Bank of Montreal analyst Peter Sklar, who rates Time Hortons stock "market perform," said he considered the impact as "slightly negative."
"We understand that price increases in Canada were not yet implemented in [the first quarter]at the retail level, but should positively impact [same store sales]beginning [the second quarter]"
China moves on lending again China boosted the reserve requirements on most of the country's banks again today, another in a series of moves to tame inflation.
The People's Bank of China could have instead boosted interest rates - and that yet may come - but some observers believe the central bank would rather try to rein in lending given recent indicators that suggest the economy's rapid growth is easing.
Just yesterday, China released its latest reading showing that annual inflation dipped in April to 5.3 per cent, down by a sliver from 5.4 per cent a month earlier.
Today, authorities boosted reserve requirements by half a percentage point.
"While rates differ between banks, the required reserve ratio (RRR) for most of the larger banks will now rise to 21 per cent," said Mark Williams, senior China economist at Capital Economics in London.
"The moves help the central bank prevent its own foreign exchange purchases from fuelling a continued surge in lending ... Looking ahead, there is a good chance that the pace of RRR increases will now slow. April's data signaled that activity growth is weakening, with the retail sales figures particularly downbeat. Of course, consumer price inflation is still high, but significant further increases in the headline rate look unlikely, based on recent price trends."
Surprise, surprise The International Monetary Fund has raised its outlook for economic growth in Europe, but warned today that much work remains as the continent tackles a spreading debt crisis.
"At the national level, strong adjustment policies are being implemented to rebuild and bolster confidence," the IMF said in its report, noting that growth will be stronger in Europe's emerging economies than in the advanced countries.
"At the regional level, the crisis management capacity of the European Union (EU) is being strengthened, and the governance framework revamped. Important actions are still required to deal decisively with weak banks across Europe's advanced economies, and to follow through with implementing the EU-wide reforms that have been agreed in principle."
The IMF also issued a harsh warning on the potential snowball effect.
"Strong policy responses have successfully contained the sovereign debt and financial sector troubles in the euro area periphery so far, but contagion to the core euro area, and then onward to emerging Europe, remains a tangible downside risk," it said.
Speculation continues to mount in the euro zone that Greece will be forced to restructure its debt, despite the country's denial. Euro zone finance officials are also scheduled to meet next week, when they will talk about the possibility of more aid to the country.
"Bearish sentiment towards the euro continues to build on the basis of a lack of urgency with respect to Greece's fiscal problems," said CMC Markets analyst Michael Hewson.
"Another general strike by unions yesterday highlights the concerns that even if further aid were forthcoming there would be no guarantee that the Greek authorities would be able to implement the extra austerity required in exchange for that aid. As two-year Greek yields hit 26% it is becoming increasingly clear that a tipping point is fast approaching, as it became apparent that no swift decision would be forthcoming before next week."
- Euroskeptics dig in as bailout costs balloon
- For Europe, Apocalypse soon?
- Tear gas, stun grenades used to disperse Greek protesters
Strong quarter for BCE BCE Inc. reported strong first quarter results on Thursday, announcing a 5-per-cent dividend increase and making further gains in wireless, even as overall profit dropped by about 28 per cent.
Overall profit fell to $503-million or 67 cents a share, from $706-million or 92 cents a year earlier, as fierce competition ramped up in the wireless space and core wired businesses, such as home phones continued a gradual decline, Globe and Mail telecom writer Iain Marlow reports.
However, adjusted earnings per share were up to 72 cents per share from 61 cents last quarter when the sale of non-core assets last year are factored out. Profit margins also improved.
BCE also boosted its outlook for the year, and now projects revenue growth of 9 per cent to 11 per cent, and an increase in adjusted earnings per share to between $2.95 and $3.05.
UBS analyst Phillip Huang said the results were "very strong," though he held his 12-month price target on the stock at $39, still with a "buy" rating.
Canadian Tire not happy with the weather Canadian Tire Corp. , still basking in the glow of this week's deal for Forzani Group Ltd., posted a higher first-quarter profit of $58.4-million or 72 cents a share, up from $51.5-million or 63 cents a year earlier. Sales climbed 3.7 per cent to $1.96-billion.
Weather didn't help the retail outlets, the retailer said today, though sales at its gas stations surged almost 16 per cent. Sales at its Mark's stores also rose.
"The lack of spring weather and the resulting decrease in customer traffic led to a 0.6-per-cent decrease in retail sales at Canadian Tire stores in Q1 2011 versus Q1 2010," the company said in its earnings statement.
"The cool weather later in the quarter impacted the Living, Fixing and Playing areas of the store, specifically in weather-related categories such as gardening, cycling and backyard."
Chief executive officer Stephen Wetmore said Canadian Tire was pleased with its overall results, noting that revenue in the auto, clothing and financial services operations met expectations. But waiting for Spring has turned out to be a downer.
"We saw strong retail sales in January and February, however, unseasonable weather in March, and continuing into April, has reduced our customer traffic and sales in seasonal product categories," Mr. Wetmore said. "We are a strong business, executing well on all our key programs, so it's unfortunate to see how our seasonal business impacted our results this quarter."
Cineplex results no blockbuster Cineplex Inc. results slumped in the first quarter as the theatre chain posted a loss of $800,000, compared to a profit of $3.8-million a year earlier, as revenue slipped 13 per cent and attendance almost 15 per cent.
"Although the exhibition industry experienced a box office decline from the record results in [the first quarter of 2010]our diversified business model and related revenue streams provided significant other revenue growth over the prior year," said chief executive officer Ellis Jacob,
In International Business today
When a Canadian was named to one of the biggest jobs in the South African corporate world, the media there had a provocative question: Why didn't the job go to a black South African instead? The Globe and Mail's Geoffrey York reports from Johannesburg.
With the election out of the way and political uncertainty now removed, Canada and Columbia are expected to move quickly on a free trade agreement. The Globe and Mail's Shawn McCarthy reports from Bogota.
Trade this year through Port Metro Vancouver is static and one of the reasons is Japan, in part because of the terrible earthquake and tsunami that hit the country, as well as changes in demand for goods from the island nation, The Globe and Mail's David Ebner writes.
In Economy Lab today
Economist Stephen Gordon explains why high gasoline prices can be good for Canada.
In Personal Finance today
Before you negotiate your mortgage, find out what you can do to polish up some of the common flaws that put off lenders.
Joint ownership is not necessarily the best option, and can result in an unintended tax burden, Tim Cestnick writes.
Some 79 per cent of Canadians aren't fully confident in their ability to teach another person about saving and budgeting, a poll shows.
From today's Report on Business
- Constellation shareholders cry foul over possible sale of tech darling
- Hedge fund boss Rajaratnam guilty of insider trading
- Enbridge looks to Asia as LNG export boom looms
- Mega Brand insiders accused of illegal trading
- Exxon Mobil Corp$81.55-0.20(-0.24%)
- Chevron Corp$104.72-0.39(-0.37%)
- Royal Dutch Shell PLC$56.33+0.04(+0.07%)
- BP PLC$36.41+0.01(+0.03%)
- Bce Inc$60.77-0.12(-0.20%)
- Canadian Tire Corporation Ltd$152.15-1.12(-0.73%)
- Cineplex Inc$51.72-0.12(-0.23%)
- Updated May 26 4:00 PM EDT. Delayed by at least 15 minutes.