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Restaurant Brands reports Q1 profit and sales down from year ago –



TORONTO – The parent company of Tim Hortons saw daily sales fall by more than 40 per cent in the last two weeks of March as the COVID-19 crisis began to take hold in Canada, but has since regained some momentum as it shifted more restaurants to serving food through delivery.

“The COVID-19 pandemic has obviously introduced a wide variety of challenges, but we feel we’re well positioned and have the resources we need to come through this,” said Jose Cil, chief executive at Restaurant Brands International Inc., during a conference call with analysts after the company reported its first-quarter financial results.

The company, which also owns Burger King and Popeyes, saw system wide sales fall at two of its brands during the first quarter ended March 31.

Tim Hortons saw a 9.9 per cent decline in the quarter, while Burger King experienced a three per cent drop. Popeyes saw a 32.3 per cent jump thanks in part to the popularity of its chicken sandwich in the U.S.

Comparable sales, a key retail metric, fell 10.3 per cent at Tim Hortons with a 10.8 per cent drop in the Canadian market.

In the last two weeks of March, daily comparable sales at the coffee-and-doughnut chain fell on average by roughly 45 per cent, the company said.

Much of this came from a fall in purchases in the breakfast and snacking categories, Cil said, as customers upended their daily routines in an effort to stay home. That means students heading to school, parents dropping off their kids or employees commuting aren’t stopping by Tim Hortons for their usual order.

“You can see that, that day part in particular is the one that’s most impacted because it’s so routine based and frequency based,” he said in an interview following the call.

The lunch and dinner categories have seen more strength, he noted, adding that trend holds for all of the company’s businesses.

Additionally, the company is used to sales picking up on Thursday and into the weekend, he said, but now experiences the strongest performance on weekdays.

The company worked within the constraints of COVID-19 regulations, which prompted some restaurants to close temporarily and others to shutter dine-in services, and focused on expanding its delivery business.

More than 1,000 Tim Hortons restaurants in Canada now offer delivery, he said – up from about 250 less than two months ago. The company is continuing to add more Canadian restaurants into its delivery roster.

Delivery sales saw a more than six-fold increase compared to pre-pandemic levels.

“It’s a bigger meal-driven type of experience,” said Cil, adding while there’s opportunity to sell beverages and baked goods through this channel, the natural, initial push has been for lunch and dinner items.

RBI also launched curbside pick up options via its mobile apps for North American customers who can’t access drive throughs, and adjusted its recent marketing to highlight the ease of using home delivery options.

“On the back of these initiatives, we spurred a positive trend in daily comparable sales growth,” said Cil during the call.

At the end of April, the company saw daily comparable sales at Tim Hortons fall on average by nearly 40 per cent, he said – “a more than 10-point improvement from the lowest level we saw in late March.”

The company noted about 75 per cent of its restaurants around the world remain open – though many with limited service models. In Canada, roughly 85 per cent of the company’s Tim Hortons restaurants are open, with many of the temporary closures at locations in universities or within malls.

“We know that the full reopening of all of our restaurants and service modes will take some time yet, but we’re encouraged by early signs of improvement in sales trends across many of our major markets,” he said.

The commentary came as RBI, which keeps its books in U.S. dollars, reported its quarterly profit fell compared with a year ago. It earned a net income of US$224 million or 48 cents per diluted share for the quarter ended March 31, down from a net income of US$246 million or 53 cents per share in the same quarter a year earlier.

Revenue totalled nearly US$1.23 billion, down from nearly $1.27 billion in the first three months of 2019.

On an adjusted basis, the company earned US$227 million or 48 cents per share for the quarter, down from an adjusted profit of US$255 million or 55 cents per share a year ago.

Analysts on average had expected a profit of 51 cents per share and US$1.23 billion in revenue, according to financial markets data firm Refinitiv.

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Canada's trade deficit doubled to $3.3B in April as COVID-19 walloped imports and exports –



Canada’s exports and imports plunged in April on falling oil prices and as the coronavirus pandemic shut down factories and retail stores, Statistics Canada said on Thursday, adding that the reopening of most auto assembly plants may help trade in the coming months.

“We are really getting hammered with respect to cars and crude,” said Peter Hall, chief economist at Export Development Canada.

Total exports fell 29.7 per cent to $32.7 billion in April, the lowest level in more than 10 years, and imports declined 25.1 to $35.9 billion, the lowest since February 2011, Statscan said.

The April trade deficit widened to $3.25 billion from a revised $1.53 billion in March, Statscan said, larger than the $2.36 billion forecast by analysts in a Reuters poll.

Exports of energy products fell $3.6 billion, the largest decrease on record, Statscan said. Crude oil exports led the decline, plunging 55.1 per cent.

Meanwhile, exports of passenger cars and light trucks slumped 84.8, while imports plunged 90 per cent.

The slump in auto and energy exports because of shutdowns was also reflected in Canada-U.S. trade data, where total trade fell by $23.4 billion, representing more than 90 per cent of Canada’s trade activity decline. The neighbouring countries’ automotive and energy sectors are highly integrated.

The coronavirus pandemic has disrupted global supply chains and forced officials in Canada to shutter non-essential businesses and urge people to stay at home. In recent weeks, Canada’s 10 provinces have gradually begun to restart their economies.

“While some factories and retailers began to reopen in May, it’s likely to take until the June data to see any material signs of rebounding economic activity,” said Royce Mendes, a senior economist at CIBC.

“With the focus now shifting to the recovery stage, and with many economies gradually re-opening since May, the worst is hopefully in the rearview mirror,” TD Bank economist Omar Abdelrahman said.

The Canadian dollar extended its decline after the release of the data, falling to 73.88 cents US.

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Canada's mortgage insurer tightens rules as it forecasts home-price drop of up to 18% – Financial Post



TORONTO — The government-backed Canada Mortgage and Housing Corp said on Thursday it would tighten rules for offering mortgage insurance from July 1, after forecasting declines of between 9 per cent and 18 per cent in home prices over the next 12 months.

The move would make it harder for riskier borrowers, who offer down payments of less than 20 per cent, to access CMHC’s default mortgage insurance.

CMHC is establishing a minimum credit score of 680 instead of the current 600, the group said in an emailed statement.

It will also limit total gross debt servicing ratios to its standard requirement of 35 per cent of annual income, compared with a threshold as high as 39 per cent currently, and total debt servicing to 42 per cent versus as much as 44 per cent now.

The measures will help curtail “excessive demand and unsustainable house price growth,” CMHC Chief Executive Evan Siddall said in the statement.

He said COVID-19 has exposed longstanding financial-market vulnerabilities, and “we must act now to protect the economic futures of Canadians.”

Some 35 per cent of Canadian banks’ mortgages are insured, their financial statements show. CMHC is the top mortgage insurer, while Genworth MI Canada and other private companies also provide similar products.

Despite evaporating activity in the housing market due to the COVID-19 pandemic, prices have continued to rise as listings have fallen off alongside demand.

Home prices across the country rose 1.3 per cent in April from March, and data from Toronto and Vancouver real estate boards showed increases of 3 per cent and 2.9 per cent in May, respectively, from a year earlier.

The CMHC has taken a more bearish view of the housing market than others. Last week, some of Canada’s biggest banks forecast maximum price declines of about 7 per cent.

Siddall last week responded to critics of its more dire outlook, saying on Twitter they were “whistling past the graveyard and offering no analysis.”

© Thomson Reuters 2020

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Canadian Dollar Price Outlook: USD/CAD Grinds Around Big Fig Support – DailyFX



Canadian Dollar, CAD, USD/CAD Price Analysis

  • This morning brought a Bank of Canada rate decision, this Friday’s economic calendar brings Canadian jobs numbers to be released at the same time as US Non-Farm Payrolls.
  • The bank held rates, and given the change in leadership the big question is forward-looking strategy at the bank.
  • USD/CAD broke down from a descending triangle formation, and is now finding support around the 1.3500 big figure. But sellers haven’t yet been able to establish any significant trends around that support, leading to the prospect of short-term pullback.

BoC Leaves Rates Flat, USD/CAD Remains Around 1.3500

Earlier this morning we heard from the Bank of Canada as the BoC left rates flat; but the prospect of change in leadership atop the BoC does highlight potential changes in the future after outgoing Bank of Canada Governor Stephen Poloz had previously stated that rates were as low as they could go. Taking over at the bank this week is Tiff Macklem, and as noted by our own Thomas Westwater earlier today, this morning’s statement likely had little input from the newly-installed BoC Governor. This does, however, point to the possibility of change on the horizon given how aggressively the coronavirus slowdown has hit global economies.

In USD/CAD, the pair has largely clung on to support around this rate decision, temporarily testing below the big figure of 1.3500 but, so far, failing to establish any continued bearish trends below that level. And this comes on the heels of an earlier-week breakdown, as USD/CAD had built into a descending triangle formation, with a series of lower-highs from late-March into mid-May, combined with horizontal support around the 1.3850 area on the chart.

USD/CAD Four-Hour Price Chart

USDCAD Four Hour Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

Can USD/CAD Bears Drive Through Psychological Support?

Of recent, commodity currencies have been on a tear against the US Dollar, USD/CAD included. AUD/USD has been on a similar display of recent and the same can be said for NZD/USD.

The trouble at this point for USD/CAD bears is the fact that the short-side move is already fairly well-developed; and prices are showing continued support around the 1.3500 big figure. Can USD/CAD bring sellers in at sub-1.3500 prices to continue pushing lower? Or, will the pair need a retracement first before continuing that bearish trend?

Change in Longs Shorts OI

On the chart is a nearby area of interest for resistance potential. As looked at in yesterday’s webinar, the space around the 1.3600 area seems especially interesting, as there are two very recent Fibonacci levels within close proximity of each other. This is the 61.8% retracement of the 2020 major move, and the 78.6% retracement of the March major move. At this point, that zone hasn’t yet been tested for resistance and a show of sellers here could re-open the door for bearish continuation strategies in the pair.

USD/CAD Hourly Price Chart

USDCAD Hourly Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

— Written by James Stanley, Strategist for

Contact and follow James on Twitter: @JStanleyFX

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