Canadian exporters such as West Fraser Timber Co. are climbing as the central bank’s surprise interest rate reduction weakened the currency, giving the companies an immediate boost while underscoring the deepening risk from the oil-price crash.
While the cut highlighted concerns about the nation’s economic outlook, the benchmark Standard & Poor’s/TSX Composite Index climbed 1.8% yesterday partly on the prospect that a lower Canadian dollar would help companies that price their goods in U.S. dollars. The index rose another 0.6% by 9:38 a.m. on Thursday.
OTTAWA — It has been just over a year since Benoit Daignault took the reins at Export Development Canada (EDC), the federal agency charged with helping companies fund and expand into new markets.
While much has changed in that time — a domestic economy now struggling to kick-start growth in the midst of an oil-price collapse — the impetus to expand into new markets, not just the United States, must still come from corporate leaders themselves.
Brian Robbins, CEO of automotive and industrial supplier Exco Technologies Ltd., is feeling confident about expanding his company’s business.
Within the last month, Exco has spent more than $20-million opening new facilities in Thailand and Brazil, with another new plant planned for Texas and some “cautious” investment in Canada, Mr. Robbins said. He said there’s solid U.S. demand for Exco’s products and he’s confident the American economy is only going to get better.
Canadian oil and gas projects worth a total of $59-billion may be deferred during the next three years as the “collapse” in capital investment in the global oil industry echoes the dark days of 2009 and 1999.
West Texas Intermediate benchmark has lost nearly half its value to reach US$53 per barrel within six months, while global benchmark Brent crude has slid to below US$58 from its year-to-date high of US$115.
TORONTO • Canadian securities regulators are proposing rules to make it faster and cheaper for companies to conduct rights offerings, just days after that issue blew up in a controversy.
Rights offerings are a form of financing in which companies allow their existing shareholders to buy stock at a discounted price to maintain their proportionate stake in the company. It is an extremely fair way to raise capital, as investors avoid dilution.
TORONTO — Canadian corporate profits have declined in five of the past six quarters and are now 16% below their post-recession peak in late 2011, according to a study released Tuesday by TD Bank.
“This decline is not as bad as during the last recession, but it is approaching the performance Canadian firms saw during the U.S. downturn in 2000-2001,” TD economist Leslie Preston writes.
Key export-driven sectors like manufacturing and resources have seen the most weakness.
TORONTO • Limited Brands Inc. investors will find out Wednesday if closing a third of La Senza’s stores over the past year has helped to boost the flagging lingerie chain’s productivity.
But in Canada, retail veterans are more curious about whether Columbus, Ohio-based Limited’s end game is to wind down the once-thriving Canadian banner in favour of its former-U.S. rival-turned-corporate sibling, Victoria’s Secret.
The business of salvaging distressed companies itself is in desperate need of rescue.
Consider that insolvency practitioners — lawyers, accountants, consultants and the like — in Canada, the U.S. and the U.K. have pocketed $837-million in professional fees and disbursements since Nortel Networks Corp. filed for court protection from creditors in January, 2009. And the tab is still running.