Bombardier Inc.’s Alain Bellemare, president and chief executive officer, arrives for the annual general meeting in Montreal, Quebec, Canada May 11, 2017. REUTERS/Christinne Muschi
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Bombardier Inc. (BBD.TO) may have to consider selling one – or potentially all – of its existing assets, some analysts say, as the beleaguered company looks to accelerate payment of its significant debt load.” data-reactid=”31″>Bombardier Inc. (BBD.TO) may have to consider selling one – or potentially all – of its existing assets, some analysts say, as the beleaguered company looks to accelerate payment of its significant debt load.
The Quebec-based company’s stock tanked on Thursday, closing the day down 32 per cent at $1.22, after it revealed its financial targets would once again fall below original expectations, largely due to ongoing challenges at its ongoing transportation division.
Bombardier also said Thursday that it is considering an early exit from its joint venture partnership with Airbus and the Quebec government, which will require additional cash investment to support the ramp-up of production of the A220 jet. The plane and train maker suggested it will take a write-down on the business, which is now expected to generate a lower return over the life of the program.
Despite the barrage of bad news, chief executive Alain Bellemare said in a statement Thursday that the company is on a “solid path toward organic growth and margin expansion.”
“We are actively pursuing alternatives that would allow us to accelerate our debt paydown,” Bellemare said.
“The objective is to position the business for long-term success with greater operating and financial flexibility.”
How the company plans to accelerate the payment of its long-term debt, which analysts say is at more than $9 billion, remains to be seen. Given Bombardier has sold off numerous assets over the last several years, including most of its commercial aviation programs, it appears to have limited options.
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Bombardier’s stock plummeted Thursday by nearly 32 per cent to $1.22.
National Bank Financial analyst Cameron Doerksen said in a note to clients Thursday that he does not expect the company to seek an equity issue, “which would be massively dilutive to existing shareholders”, or an equity-for-debt swap.
“Rather, we speculate that that company may be looking at strategic alternatives that could include the sale of one of its two remaining divisions,” Doerksen wrote.
“If that is the case, the most obvious candidate in our view would be its Aviation business.”
Doerksen said that Bombardier’s aviation division – which consists of its business jet program – is “a solid business with a refreshed lineup, decent margins and a good backlog” that could potentially be worth $6.6 billion. That would leave Bombardier with just its transportation business, its most profitable segment.
JP Morgan analyst Seth Seifman wrote in a note to clients that the strong language used by Bombardier in the news release Thursday suggests some urgency and “the potential to pursue strategic options, including a breakup and sale of all or part of the company.”
“Raising capital through asset sales is the only alternative we can think of and, for this to be meaningful, it may include one or both of Bombardier’s two major businesses: (business jets) and trains,” he wrote.
“The Beaudoin-Bombardier family’s views are a key variable in how this situation will evolve.”
RBC Capital Markets analyst Walter Spracklin lowered the company’s price target from $3.00 to $2.00 on Thursday, saying that what the company considers when it comes to “strategic alternatives” will be the key “wildcard” for Bombardier’s stock performance.
Bombardier has been exiting the commercial aerospace segment over the last several years, selling off several key assets as it searches for sustainable growth and profitability. It has sold off the Q400 and CRJ programs, as well as its aerostructures business.
Bombardier handed control of the struggling CSeries program to Airbus in October 2017. Its current 30 per cent stake in the Airbus joint venture is its only remaining commercial aviation business, although the company is now reassessing its participation. Spracklin said Bombardier management indicated that the cash injection required to support the A220 production ramp-up is in the range of “several hundred million.”
This is the second time in the last six months that Bombardier has adjusted its financial targets because of rising costs tied to several key rail projects. In August, the company announced it will invest between $250 million and $300 million into its transportation division to ensure late-stage rail projects are completed and delivery schedules are met.
The company is in the final stages of Bellemare’s five-year turnaround plan that began in 2015.
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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
