The future of Bombardier Inc. is being called into question after the company said it was actively considering alternatives to reduce its staggering debt.
After exiting the commercial aircraft business, selling its aerostructures unit and unloading a large tract of land in Toronto, the company said it is working to reduce debt and “solve its capital structure.” Bombardier’s long-term debt stood at more than US$9 billion as of Dec. 31, 2018.
“We are actively pursuing alternatives that would allow us to accelerate our debt paydown. The objective is to position the business for long-term success with greater operating and financial flexibility,” it said in a news release Thursday that warned about weaker financial results for 2019.
What that means is unclear, says Walter Spracklin of RBC Capital Markets.
“The company’s rather opaque language about accelerating its strategic review to ‘solve’ its capital structure will require further clarity,” he wrote in a report.
The language suggests some urgency and not just pushing out debt maturities, added Seth Seifman of JP Morgan.
“This suggests to us the potential to pursue strategic options, including a breakup and sale of all or part of the company,” he wrote. “It may include one or both of Bombardier’s two major businesses: bizjets and trains.”
Bombardier’s shares plunged more than 30 per cent to their lowest level in nearly four years following its release which pointed to a possible withdrawal from a partnership with Airbus in the commercial aircraft previously called the C Series.
The company said its financial miss is mainly due to actions taken to resolve challenging rail projects, the timing of milestone payments and new orders and the delivery of four business jets slipping into the first quarter of 2020.
The stock was down 54 cents at $1.25 in afternoon trading on the Toronto Stock Exchange.
The Montreal-based company said it is reassessing its ongoing participation in the Airbus partnership about two years after giving up a controlling stake in the program to Europe-based Airbus SE.
Airbus owns 50.06 per cent of the joint venture, Bombardier 33.58 per cent and Quebec 16.36 per cent after injecting US$1 billion in 2016.
While the A220 program is gaining orders as it proves its value, additional cash will be required to support the ramp-up of production, a delay in reaching break-even and lower returns over the life of the program, it said in a preliminary announcement of its fourth-quarter and 2019 results set to be released Feb. 13.
“This may significantly impact the joint venture value,” Bombardier said, adding it will disclose any writedown next month.
Bombardier said it expects consolidated revenue for 2019 to total about US$15.8 billion and consolidated adjusted earnings before interest, taxes, depreciation and amortization of about US$830 million.
A total of 58 aircraft were delivered in the fourth quarter and 175 for the full year, including 11 Global 7500s.
Industry analysts called the financial warning negative with some cutting their price target for Bombardier’s shares.
“The key question is how much closer is the company to solving these issues, and what comfort can we get that new issues of similar scope and magnitude will not recur,” added Spracklin.
Why Canada is unlocking its vault of maple syrup – CBC.ca
Canada’s maple syrup industry has become an international focus in recent days, with headlines shouting that the country has been forced to tap into its strategic reserve to make up for shortages.
Quebec produces about 73 per cent of the all maple syrup in the world. And the Quebec Maple Syrup Producers (QMSP), an organization that governs the province’s maple syrup producers, has said it will release about 22.7 million kilograms of maple syrup from its strategic reserve into the market by February.
For some, the headlines may have been an eye-opener that Canada even has a stockpile of maple syrup. CBC Explains the purpose of this reserve, why it had to be tapped into, and explores whether there was ever a shortage of maple syrup.
What is the strategic reserve?
Quebec’s maple syrup industry is subject to a supply-management system, meaning it employs a quota system run by the QMSP which dictates market volume. The QMSP also controls the Global Strategic Maple Syrup Reserve, which can hold more than 45 million kilograms of maple syrup.
The reserve was created in 2000 to keep syrup in stock and ensure a constant supply for national and international markets, regardless of the size of the harvest, Hélène Normandin, a spokeswoman for QMSP told CBC’s As It Happens.
One site, the Laurierville Plant and Warehouse, in the Centre-du-Québec region, covers an area of 24,805 square metres – the equivalent of five football fields. That site alone can store 25 million kilograms of maple syrup, or 94,000 barrels.
When properly stored in barrels, maple syrup can last for many years, said Michael Farrell, the former director of Cornell University’s Uihlein Forest, a maple syrup research and extension field station in Lake Placid, N.Y.
In years when the yield is good, and more syrup is produced than needed, the extra can be sold to the QMSP and stored “so that when there’s bad years, you have enough to keep people stocked up with syrup on their pancakes,” Farrell said.
“Without this in reserve [this year], there would be much less syrup up on store shelves, and the price would be much higher.”
Why did they have to tap into the reserve this year?
In 2021, there was about 60 million kilograms of maple syrup produced, an average amount when compared to past years but down 18 million kilograms compared to 2020.
“It was an average season, not bad, but not as big as the two last seasons — 2019 and 2020 were just amazing, wonderful years of production,” Normandin said.
However, worldwide demand has increased by more than 20 per cent — a spike industry experts believe was partly fuelled by more people cooking at home during the pandemic — and that has strained the supply
How did the weather affect the yield?
Not every year is a perfect year for every agricultural harvest. And this was one of those years which was not ideal in terms of maple syrup production, said Abby van den Berg, a research associate professor at the University of Vermont’s Proctor Maple Research Center in Underhill, Vt.
Many places didn’t have good weather for sap flow until later in the production season, she said.
In order for sap to flow, there has to be freezing temperatures, followed by above-freezing temperatures, she said.
“There just weren’t that many sap flow days,” Van den Berg said.
Was there really a ‘shortage’ of syrup.
‘Canada tapping reserve maple syrup supply amid shortage’
‘Facing shortages, Canada taps its strategic reserve of maple syrup’
It was headlines like those that made Van den Berg bristle, she said.
“We had a year where the harvest was not super. It actually wasn’t terrible. It wasn’t as good as it had been in past years, and the reserve was there to perform its function,” she said. “And there was no disruption in supply. There is no shortage.”
“All of the headlines said ‘maple syrup shortage,'” she said. “And literally, there is no shortage because of the reserve.”
Philippe Charest-Beudry, the owner of Ste-Anne-de-la-Rochelle, Que.-based Brien Maple Sweets, which packages and sells bottles of maple syrup, said his company has been able to fill every contract so far this year.
“I’ve not heard in the industry other players that we’re not able to meet contracts,” he said.
Has the reserve ever run into trouble with its stock?
Between 2011 and and 2012 around 3,000 tonnes were stolen from a storage facility in Quebec. But it was a few years earlier than that when the strategic reserve actually did run dry.
“People probably don’t remember, but in 2008, after two or three years in a row of bad production, just bad weather, [they] ran out of syrup in the reserve,” said Mike Farrell
“There was nothing there and there wasn’t enough syrup to go around. Prices spiked. We lost a lot of markets for pure maple syrup,”he said.
Ray Bonenberg, former president of the International Maple Syrup Institute and a maple syrup producer near Pembroke, Ont., said 2008 was an “awful year in production.”
“It was abnormally cold until April 1st and then it got really warm, and I know my season was like eight days so it was disastrous,” he said. “The reserve was right down to the bottom, and has been building it up.”
What does this mean for next year?
Farrell said the 22.7 million kilograms of maple syrup represents a “significant amount to take out the reserve this year.” But what does that mean for the near future of the reserve?
There are currently around 50 million maple syrup taps in Quebec. In July, the QMSP approved the issuance of seven million new ones to meet the demand.
“From our perspective, we believe it should solve the issue on the short term basis,” said Charest-Beudry, “I don’t see a season next year where there’s no more maple syrup in the grocery store.”
RBC hiking dividend, buying back shares despite Q4 profit miss – BNN
Royal Bank of Canada announced a dividend hike and plans to repurchase tens of millions of its shares on Wednesday despite also reporting quarterly profit that trailed expectations.
In a release, RBC said it will raise its quarterly dividend 11 per cent to $1.20 per share. The bank said it’s also seeking approval from the Office of the Superintendent of Financial Institutions (OSFI) to buy back up to 45 million of its common shares.
It’s the second such move this week, after Bank of Nova Scotia similarly announced plans for a buyback and dividend hike on Tuesday. Both banks are doing so after OSFI recently lifted its pandemic-era prohibition on share repurchases and buybacks.
RBC also said on Wednesday its 2021 fiscal year profit climbed 40 per cent year-over-year to $16.1 billion. In the fiscal fourth quarter, which ended Oct. 31, the bank’s net income rose 20 per cent to $3.89 billion. That bottom-line performance was helped in part by a release of $227 million from funds that were previously set aside for loans that could go bad. It’s the third consecutive quarter that RBC moved cash out of its provisions for credit losses and funneled that money into its profit stream.
On an adjusted basis, the quarterly profit worked out to $2.71 per share. Analysts, on average, were expecting $2.81.
“Our overall performance in 2021 reflected strong earnings, premium shareholder performance, and highlighted our ability to successfully navigate a complex operating environment while continuing to invest in talent and innovations to support future growth,” said Dave McKay, RBC’s president and chief executive, in a release.
RBC’s bread-and-butter personal and commercial banking unit was the primary profit driver in the latest quarter, as net income in that division rose 35 per cent year-over-year to $2.03 billion, in part thanks to the release of $208 million that was previously provisioned for potentially sour loans.
Royal Bank’s domestic banking business also benefitted from double-digit growth in its mortgage book. Indeed, in a supplemental release Wednesday, RBC said it had an average Canadian mortgage balance of $329.5 billion in the fourth quarter; that represents year-over-year growth of almost 13 per cent compared to the balance of $293 billion in the fiscal fourth quarter of 2020.
Fourth-quarter profit from the bank’s capital markets unit rose 10 per cent to $920 million, with RBC attributing some of that to a rise in mergers and acquisitions activity.
Meanwhile, earnings from RBC’s wealth management business inched up two per cent year-over-year to $558 million.
Ontario passes new rules aimed at work-life balance for employees – CP24 Toronto's Breaking News
The Ontario government has passed new laws it says will help employees disconnect from the office and create a better work-life balance.
On Tuesday, the government said it passed the “Working for Workers Act,” which requires Ontario businesses with 25 people or more to have a written policy about employees’ rights when it comes to disconnecting from their job at the end of the day.
These workplace policies could include, for example, expectations about response time for emails and encouraging employees to turn on out-of-office notifications when they aren’t working, the government says.
According to the act, between January 1 and March 1 of each year an employer must ensure it has a written policy in place for all employees with respect to disconnecting from work.
“We are determined to rebalance the scales and put workers in the driver’s seat of Ontario’s economic growth while attracting the best workers to our great province,” Monte McNaughton, Minister of Labour, Training and Skills Development, said in a statement Tuesday.
The act also bans the use of non-compete clauses, which prevent people from exploring other work opportunities and higher salaries at other jobs.
According to the government, Ontario is the first jurisdiction in Canada, and one of the first in North America, to ban non-compete agreements in employment.
McNaughton says the new laws not only protects workers’ rights, but also will help to attract top talent and investments to the province.
The act also removes “unfair” work experience requirements for foreign-trained immigrants trying to work in their professions.
It also introduces a mandatory licencing framework for temporary help agencies and recruiters to help prevent labour trafficking.
“This legislation is another step towards building back a better province and cementing Ontario’s position as a global leader, for others to follow, as the best place in the world to live, work and raise a family,” McNaughton said.
A government spokesperson told CTV News Toronto that while the act has not yet received royal assent, it is expected to later this week.
Timelines for when each law under the Working For Workers Act will come into effect have not been announced yet and the government said it there will be a initial grace period for businesses.
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