These are stories Report on Business is following Thursday, May 29, 2014.
Up in smoke
Pity the poor executive who wades into an argument he or she just can’t win. Think asbestos mining. Or, in this case, smoking.
Saturday marks World No Tobacco Day, which has prompted the chief executive officer of Imperial Tobacco Canada, and others, to speak out.
But Marie Polet will struggle to be heard. She won’t change the government’s approach to taxation. And her comments may well come back to haunt her.
Ms. Polet, who has been with British American Tobacco, Imperial’s parent, for decades, issued a statement today calling for a new approach to curb tobacco use, specifically a program known as “tobacco harm reduction” that includes such things as e-cigarettes.
This program, she said, offers a “promising health policy direction” by offering “adult smokers” less-risky options.
But noting how Imperial Tobacco wants to be part of the solution, she then goes on to slam government, and to note how her parent company spends some $350-million a year in R&D that helps find alternative products.
“The current path of heavy-handed regulations and excessive taxation has many unintended consequences such as contraband, government lost tax revenue, as well as increasing harassment on the segment of the adult population that wishes to retain its right to smoke,” Ms. Polet said.
“It is time for government to look at new options, tobacco harm reduction in particular.”
(Increasing harassment? As in, please don’t smoke next to me so I don’t have to breathe it in?)
For the record, Canadian production climbed by almost 6 per cent in April to 1.9 billion cigarettes. Sales rose 0.6 per cent to 1.6 billion.
Tyson in rival bid
The henhouse is getting awfully crowded.
Tyson Foods Inc. today launched a rival bid valued at $6.1-billion for Hillshire Brands Co., eclipsing an offer earlier this week from chicken producer Pilgrim’s Pride Co.
Pilgrim’s, in turn, had been seeking to bust up a proposed merger of Hillshire and Pinnacle Foods Inc.
Tyson’s bid is $50 a share in cash, compared to the Pilgrim’s bid of $45.
"Our proposal provides Hillshire shareholders with an immediate cash premium for their shares that we believe is both greater and more certain than what can be attained in the near term by the company either on a standalone basis or in combination with any other food processing company,” said Tyson chief executive officer Donnie Smith.
U.S. economy contracts
The U.S. economy fared far worse than believed in the first quarter of the year, hit by an ugly winter.
The economy contracted at an annual pace of 1 per cent in the first three months, according to the Commerce Department today, a showing that was revised from an initial estimate of marginal expansion.
While the revision was expected to show a contraction, it was deeper than the 0.6 per cent forecast by economists.
This winter was particularly hard on both the U.S. and Canadian economies, and a pickup is expected.
“But don’t fret too much, nearly all of the damage came from a lower estimate for inventories, and leaner stockpiles should help lift [the second-quarter and third-quarter] pace,” said chief economist Avery Shenfeld of CIBC World markets.
CIBC beats forecasts
Canadian Imperial Bank of Commerce today reported second-quarter earnings that beat analyst expectations, but were mired by one-time items, The Globe and Mail's Tim Kiladze reports.
The bank posted a profit of $306-million, or 73 cents a share, down significantly from $862-million a year earlier. After stripping out one time items, which include a significant non-cash charge, CIBC earned $887-million, or $2.17 a share, beating estimates of $2.06 per share.
Earlier in May the bank announced a goodwill writedown on its Caribbean division, as well as higher loan losses in the region that colour the quarter’s results.
CIBC also hiked its quarterly dividend by 2 cents a share to $1.
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