We're #25! Industrials power modest Q3 gain for the TSX - BNN | Canada News Media
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We're #25! Industrials power modest Q3 gain for the TSX – BNN

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The S&P/TSX Composite Index rose 3.91 per cent in the third quarter, with gains moderating after a blowout Q2 as equity markets digested the shocks from the COVID-19 pandemic, prospects for continued economic shutdowns and the impact of lower-for-longer interest rates.

Those gains have the Toronto benchmark ranked 25th out of 92 global peers, sandwiched between Romania’s Bucharest BET Index and Germany’s DAX Index, and comfortably lagging the performance of the U.S. broad-market S&P 500 and the blue-chip Dow Jones Industrial Average.

In all, nine of the 11 TSX subgroups were in positive territory for the quarter, indicating a degree of breadth to the gains.

Below, BNN Bloomberg takes a look at the TSX leaders and laggards for the quarter that was.

Sector leaders:

Industrials: +13.22 per cent

Utilities: +9.88 per cent

Materials: +8.76 per cent

Industrials led the way for the TSX, as investors looked to parse the impact on Canada’s economic reopening on the nation’s transport, construction and equipment makers. Utilities, which typically perform well in a low-rate environment due to their need to borrow capital to fund expansions and have a habit of paying steady dividends, took second spot with a nearly 10 per cent gain. The materials subgroup took third sport with a nearly nine per cent gain, with gold prices holding near a multi-year high due to global economic uncertainty. But it wasn’t just the precious metal that helped the subgroup, with some strength in copper lifting base metals producers amid speculation Chinese industrial activity was beginning to recover from the pandemic-induced demand destruction.

Lead gainers:

Trillium Therapeutics Inc.: +72.45 per cent

Pretium Resources: +50.00 per cent

Ritchie Bros. Auctioneers: +42.88 per cent

Trillium Therapeutics:

Trillium hasn’t just been a standout performer in the third quarter, it’s been the top performer on the TSX Composite Index so far this year, rising more than 1,000 per cent. The company, which develops cancer treatments for conditions including lymphoma, has seen encouraging results for some of it’s treatments, buoying investor enthusiasm. Trillium’s efforts haven’t gone unnoticed by some of the heavy hitters in the pharma industry, with Pfizer Inc. taking a US$25 million equity stake in the firm during the quarter. Trillium also raised $150 million in Q3 through a share offering.

Pretium Resources:

The rising price of gold lifted all boats, but none more than single-mine operator Pretium. The company, which operates its Brucejack mine in north-west British Columbia, surged past analyst expectations in its most recent quarter. The rising price of bullion prompted Pretium to raise its full-year free cash flow expectations, based on an average gold price of US$1,800 per ounce. However, Pretium also warned that COVID-19 measures would raise costs as it looks to protect its workers and operations from the ravages of the virus. Pretium’s Brucejack mine is a sprawling claim with difficult geological hurdles and is seen as a potential acquisition target, with Barrick Gold Chief Executive Officer Mark Bristow having been reluctant to say the mining giant wouldn’t take a look at a potential tie-up.

Ritchie Bros Auctioneers:

Canada’s preeminent dealer of used industrial, farming and construction equipment has thus far weathered the pandemic-induced slowdown. Net income decreased a paltry two per cent in the company’s most recent quarter, even in the face of lockdowns and a drop in overall economic activity. There is, however, a degree of counter-cyclicality to Ritchie Bros results. As a middleman for the sale of second-hand equipment, the firm often benefits from customers seeking out deals on the second-hand market rather than shelling out for brand new equipment.

Sector laggards:

Health care: -14.44 per cent

Energy: -9.39 per cent

Communications services: +0.79 per cent

Trillium’s outsized gains weren’t enough to spare the health care sector from posting the weakest performance of the composite’s 11 subgroups in the quarter. Health care was hammered by some noticeable weakness in the cannabis sector as pot stocks continue to be punished for rocky performances. Energy’s rough ride continued, albeit with a disconnect from underlying energy prices. While individual stocks have been under pressure, crude oil prices have largely been in a holding pattern, with North American benchmark West Texas Intermediate hovering around US$40 per barrel as investors assess how the pandemic and subsequent economic reopenings impact the demand picture. Communications services has seen a bit of a mixed bag through the quarter, as Canada’s Big Three telcos spar with new entrants over wholesale network access rates and Cogeco battles a takeover offer from Altice USA and Roger Communications, which muddies the picture when it comes to overall performance.

Lead laggards:

Aurora Cannabis Inc: -63.07 per cent

Vermilion Energy Inc: -48.51 per cent

Enerplus Corp: -36.13 per cent

Aurora Cannabis:

Aurora’s stock has been demolished amid persistent cannabis oversupply concerns. Shares in the company plunged more than 25 per cent in one trading session alone after the company disappointed investors with its fourth-quarter results as growing pains persist in the cannabis market. The firm was also chastised by MKM Partners, with their analyst calling on Aurora to stop growing so much cannabis as the market remains out of balance with consumer demand. The company says it expects to reach positive EBITDA (earnings before interest, taxes, depreciation, and amortization) by the second quarter of 2021, about 18 months later than earlier projected.

Vermilion Energy:

The geographically-diversified energy company, which operates not only in North American but also off the coast of Ireland and France, has seen its share price swing with the vagaries of international energy markets. Fund flows from operations, a key metric in the energy sector, plunged 52 per cent in the company’s most recent quarter as concerns over global energy demand mounted. Vermilion has also been hampered by price impacts from internal squabbling over production quotas for OPEC members and suspended its dividend in April.

Enerplus:

The energy price pressures also took a toll on Enerplus in the third quarter. The company, which operates in Western Canada, North Dakota, Montana and Pennsylvania, posted a 13 per cent decline year-over-year in its most recent quarter, reflecting a troubled picture for overall consumer demand. Enerplus also booked significant impairment charges in the quarter, further hampering results.
 

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Telus prioritizing ‘most important customers,’ avoiding ‘unprofitable’ offers: CFO

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Telus Corp. says it is avoiding offering “unprofitable” discounts as fierce competition in the Canadian telecommunications sector shows no sign of slowing down.

The company said Friday it had fewer net new customers during its third quarter compared with the same time last year, as it copes with increasingly “aggressive marketing and promotional pricing” that is prompting more customers to switch providers.

Telus said it added 347,000 net new customers, down around 14.5 per cent compared with last year. The figure includes 130,000 mobile phone subscribers and 34,000 internet customers, down 30,000 and 3,000, respectively, year-over-year.

The company reported its mobile phone churn rate — a metric measuring subscribers who cancelled their services — was 1.09 per cent in the third quarter, up from 1.03 per cent in the third quarter of 2023. That included a postpaid mobile phone churn rate of 0.90 per cent in its latest quarter.

Telus said its focus is on customer retention through its “industry-leading service and network quality, along with successful promotions and bundled offerings.”

“The customers we have are the most important customers we can get,” said chief financial officer Doug French in an interview.

“We’ve, again, just continued to focus on what matters most to our customers, from a product and customer service perspective, while not loading unprofitable customers.”

Meanwhile, Telus reported its net income attributable to common shares more than doubled during its third quarter.

The telecommunications company said it earned $280 million, up 105.9 per cent from the same three-month period in 2023. Earnings per diluted share for the quarter ended Sept. 30 was 19 cents compared with nine cents a year earlier.

It reported adjusted net income was $413 million, up 10.7 per cent year-over-year from $373 million in the same quarter last year. Operating revenue and other income for the quarter was $5.1 billion, up 1.8 per cent from the previous year.

Mobile phone average revenue per user was $58.85 in the third quarter, a decrease of $2.09 or 3.4 per cent from a year ago. Telus said the drop was attributable to customers signing up for base rate plans with lower prices, along with a decline in overage and roaming revenues.

It said customers are increasingly adopting unlimited data and Canada-U.S. plans which provide higher and more stable ARPU on a monthly basis.

“In a tough operating environment and relative to peers, we view Q3 results that were in line to slightly better than forecast as the best of the bunch,” said RBC analyst Drew McReynolds in a note.

Scotiabank analyst Maher Yaghi added that “the telecom industry in Canada remains very challenging for all players, however, Telus has been able to face these pressures” and still deliver growth.

The Big 3 telecom providers — which also include Rogers Communications Inc. and BCE Inc. — have frequently stressed that the market has grown more competitive in recent years, especially after the closing of Quebecor Inc.’s purchase of Freedom Mobile in April 2023.

Hailed as a fourth national carrier, Quebecor has invested in enhancements to Freedom’s network while offering more affordable plans as part of a set of commitments it was mandated by Ottawa to agree to.

The cost of telephone services in September was down eight per cent compared with a year earlier, according to Statistics Canada’s most recent inflation report last month.

“I think competition has been and continues to be, I’d say, quite intense in Canada, and we’ve obviously had to just manage our business the way we see fit,” said French.

Asked how long that environment could last, he said that’s out of Telus’ hands.

“What I can control, though, is how we go to market and how we lead with our products,” he said.

“I think the conditions within the market will have to adjust accordingly over time. We’ve continued to focus on digitization, continued to bring our cost structure down to compete, irrespective of the price and the current market conditions.”

Still, Canada’s telecom regulator continues to warn providers about customers facing more charges on their cellphone and internet bills.

On Tuesday, CRTC vice-president of consumer, analytics and strategy Scott Hutton called on providers to ensure they clearly inform their customers of charges such as early cancellation fees.

That followed statements from the regulator in recent weeks cautioning against rising international roaming fees and “surprise” price increases being found on their bills.

Hutton said the CRTC plans to launch public consultations in the coming weeks that will focus “on ensuring that information is clear and consistent, making it easier to compare offers and switch services or providers.”

“The CRTC is concerned with recent trends, which suggest that Canadians may not be benefiting from the full protections of our codes,” he said.

“We will continue to monitor developments and will take further action if our codes are not being followed.”

French said any initiative to boost transparency is a step in the right direction.

“I can’t say we are perfect across the board, but what I can say is we are absolutely taking it under consideration and trying to be the best at communicating with our customers,” he said.

“I think everyone looking in the mirror would say there’s room for improvement.”

This report by The Canadian Press was first published Nov. 8, 2024.

Companies in this story: (TSX:T)

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TC Energy cuts cost estimate for Southeast Gateway pipeline project in Mexico

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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.

Companies in this story: (TSX:TRP)

The Canadian Press. All rights reserved.

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BCE reports Q3 loss on asset impairment charge, cuts revenue guidance

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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.

Companies in this story: (TSX:BCE)

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