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Rogers Communications beats the Street with 35% profit surge

Rogers Communications beats the Street with 35% profit surge

TORONTO — Rogers Communications is reporting a 35 per cent increase in second-quarter net income, beating analyst estimates.

Its net income was $531 million or $1.03 per share, while adjusted profit was $1 per share.

Analysts had estimated Rogers would have 90 cents per share of net income, or 93 cents per share after adjustments, according to Thomson Reuters.

Revenue was $3.59 billion — up four per cent from last year’s second quarter and within analyst estimates.

It’s the first financial report issued by the Toronto-based telecommunications and media company since Joe Natale became its CEO in April.

Natale is a former CEO of Telus, where he had a reputation of building customer satisfaction and reducing turnover.

He said in today’s announcement that Rogers will improve customer service but also intensify a company-wide focus on controlling costs and improving profitability for shareholders.

 

Blockbuster Avista deal lifts Hydro One into Top 20 utilities on continent

Blockbuster Avista deal lifts Hydro One into Top 20 utilities on continent

Hydro One Limited, the largest electricity transmission and distribution provider in Ontario, has struck a deal to purchase Avista Corp., a pure-play regulated electric and gas utilities holding company that has operations in U.S. northeast and Alaska, for $6.7 billion.

The acquisition, which will see shareholders of publicly listed Avista receive US$53 a share and which was announced after the markets closed Wednesday, marks Hydro One’s first transaction in the U.S. since it went public in late 2015.

The purchase,marks a proud moment for Canadian champions as we grow our business into a North American leader,” Mayo Schmidt, Hydro One’s chief executive, said, adding the transaction “will be accretive to earnings per share in the mid-single digits in the first full year of operation.” More importantly the acquisition offers shareholders of Hydro One “a significant and stable increase to earnings and cash flow underpinned by fully regulated utility operations.” Hydro One has promised to continue to pay out 70 to 80 per cent of its earnings as dividends.

Investors, however, were not impressed and Hydro One fell the most in eight months Thursday morning after the deal that analysts said is too costly and exposes the Canadian energy company to regulatory hassles.

“Hydro One is paying the price to gain exposure to U.S. markets,” Shahriar Pourreza, an analyst at Guggenheim Securities, said in a note Thursday. The “very rich valuation” is “likely a near-term anomaly.”

Hydro One fell as much as 5.4 per cent to $21.32 in Toronto, the biggest intraday decline since Nov. 10, before paring losses. Avista rose 20 per cent to US$51.83 in New York.

If and when the transaction closes — and the two parties are targeting the second half of 2018 — the combined entity will have an enterprise value of $31.2 billion, and assets of $32.2 billion. It will rank in the Top 20 North American utilities that are focused on regulated transmission, electricity and natural gas local distribution and serve more than two million retail and industrial customers.

In entering the U.S., Hydro One is following the lead set by two East Coast utilities, Newfoundland-based Fortis Inc. and Nova Scotia-based Emera Inc.

And Hydro One is following the lead set by those two entities in the way it finances such acquisitions: it is selling $1.4 billion of 4 per cent convertible debentures represented by instalment receipts.

In that structure, investors will be paid one-third of the cost of each $1,000 debenture on closing with the balance ($667) being paid at a future date when all the conditions have been met. As a result, holders will receive an effective 12 per cent yield on the first installment. The rest of the purchase price will come from placing US$2.6 billion of debt.

When the transaction closes, Avista will be run as a Spokane-based stand-alone company. Synergies between the two companies are expected to be small given that “no workforce reductions” are planned. Instead efficiencies will flow through “enhanced scale, innovation, shared IT systems and increased purchasing power.”

Sears Canada to begin liquidation sales at 59 stores today. Is one of them near you?

Sears Canada to begin liquidation sales at 59 stores today. Is one of them near you?

TORONTO — Sears Canada has been given approval to begin liquidation sales Friday at the 59 locations it plans to close.

Ontario Superior Judge Barbara Conway approved the motion Tuesday.

Earlier in the day, Sears lawyer Jeremy Dacks said the company wanted to start sales of its merchandise, furniture, fixtures and equipment as soon as possible so it can “maximize” benefits for its stakeholders.

The liquidation sales will only occur at the 59 stores that are set for closure. They will begin Friday and run until Oct. 12, with the majority to be overseen by a third-party liquidator.

Current employees in the stores pegged for liquidation will be asked to stay on the job until the sales are complete and the locations are shut down.

The beleaguered department store owner has been operating under court protection from creditors since June 22 when it announced its plan to shutter 59 stores and cut approximately 2,900 jobs.

Here are the stores Sears is closing:

Last week, Ontario Superior Court Judge Glenn Hainey gave the company the green light to begin the process of putting itself up for sale. He also gave the retailer approval to pay $9.2 million in retention bonuses to executives and other key employees.

The payout was part of a compromise with retired employees that will see Sears Canada continue making some benefit and pension payments to retirees until Sept. 30.

Founded in 1952, Sears Canada says it hopes to exit court protection as soon as possible this year.

Strong indicators Alberta economy on rebound

Strong indicators Alberta economy on rebound

As Alberta’s economy rebounds from the downturn in the price of oil, new data shows employment insurance use is on the decline.

The province outpaced the rest of Canada with an 11.1 per cent year-over-year decline in EI beneficiaries, according to Statistics Canada.

Economic indicators tell a consistent story — the worst of the downturn has ended, Trevor Tombe, associate professor of economics at the University of Calgary, said Thursday.

Recent data show provincial unemployment down from a high of nine per cent in November 2016. In addition, there’s been a 9.3 per cent increase in the first quarter for job vacancies in the province. Alberta’s business confidence achieved six consecutive gains in Canadian Federation for Independent Business surveys, before holding steady in June.

“The corner has clearly been turned,” Tombe said.

Since October 2014, additional EI payments into Alberta have totalled $3 billion over and above the norm, he said. Typically, the province would receive roughly $50 million a month.

The 72,000 Albertans receiving regular EI benefits in May, according to StatsCan, represented a 7.2 per cent drop from the previous month, in addition to the year-over-year decline.

Alberta was one of eight provinces to see a decline from April. Nationally, the decline from the previous month was 2.4 per cent and the year-over-year drop was only 4.9 per cent.

The presence of other positive economic indicators bode well for economic recovery in Alberta, especially in comparison to the other provinces hit hardest by the oil downturn — Saskatchewan and Newfoundland and Labrador.

“The declines that you’ve seen in Alberta over the past two months — you haven’t seen similar sized declines in those other two provinces,” said Marton Lovei of Statistics Canada.

The May EI figures represent Alberta’s first year-over-year decrease since November 2014, when the downturn in oil prices began.

Tombe said the reduction in EI beneficiaries might be the result of a strengthening economy, but also said there were factors that contributed to Alberta’s outsized decline that were beyond the norm.

Statistics Canada attributed it in part to an increase in EI beneficiaries in northern Alberta in May 2016 associated with the Fort McMurray wildfires and evacuation. More than one-third — 34.6 per cent — of the decline in beneficiaries in Alberta in the 12 months to May occurred in the census agglomeration of Wood Buffalo, where Fort McMurray is located.

The federal government also made it easier to apply for EI in 15 regions of the country, including Alberta, offering up to an additional 20 weeks of regular benefits for areas hit hardest by declines in commodity prices.

John Rose, chief economist for the City of Edmonton, said the city’s economy came through the recession in relatively good shape.

Since January, Edmonton has seen a marked improvement in labour market conditions, including a turnaround in the city’s manufacturing sector, he said.

He noted about a quarter of jobs in Edmonton are in education, health care and public administration.

“While those areas don’t go down as quickly or as far as other sectors of the economy, particularly energy, they don’t bounce back quite as quickly,” Rose said.

Rose expects a return to GDP growth for Edmonton and for Alberta.

“I’m not aware of anyone who isn’t forecasting growth for the province of Alberta in the range somewhere from the low two per cent range … all the way up to 3.3 per cent,” he said.

Rose said his forecasts are on the modest end — 2.3 per cent growth for the province and 1.7 per cent for the city of Edmonton.