Author: train2invest Admins

Loblaw profit jumps nearly 40 per cent even as inflation drives up costs for retailers

Loblaw Cos. Ltd. L-T -1.18%decrease saw its profits jump by nearly 40 per cent in the first quarter, even as inflationary pressures have increased costs for retailers and their product suppliers.

Loblaw reported on Wednesday that internal price increases at its grocery stores have tracked slightly higher than the consumer price index. And while the company is seeing shoppers become more price-sensitive – with more propensity to visit discount stores and to resist products at higher price points – the shift has not been dramatic.

“We’re not yet seeing that expected shift that comes when you have plus-6-per-cent inflation for month after month,” chairman and president Galen Weston said. “We think that’s an indication of the consumer having more money in their wallets, still, than they would have had pre-COVID levels. But we’re watching it very carefully, because prices are continuing to grow, consumer behaviour is shifting.”

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As Canadians have been pinched by the rising price of food, Loblaw has seen a shift to its discount stores, such as No Frills and Maxi, which account for roughly 60 per cent of the company’s grocery sales. This change in shopping behaviour has affected sales at its more conventional stores – which include its namesake banner as well as others such as Provigo, Zehrs and Your Independent Grocer – but those outlets still performed well relative to competitors, according to the company.

Shoppers have also been buying more private-label products: Sales of Loblaw’s No Name brand have reached all-time highs, Mr. Weston said. The boost in private-label items is good news for grocers, who make higher profit margins on such products.

Pricing has been a sensitive topic of late, as Loblaw recently made headlines for a high-profile dispute with PepsiCo-owned Frito-Lay. The snack giant stopped shipments to Loblaw-owned stores for two months as negotiations over price increases stalled. That dispute was resolved in April. Many product vendors have been approaching retailers to request increases to the wholesale price they are paid, as costs for labour, transportation, packaging and raw materials have been rising.

Loblaw has a central procurement team that handles those negotiations and evaluates the impact of inflation on the cost of those goods, Mr. Weston said on Wednesday.

“It allows us to negotiate with our vendor base, we believe, with an elevated level of precision. We’ve talked about this before, about putting through real, justifiable cost increases but being very careful about accepting cost increases that are not truly justified.”

Although government-imposed restrictions related to COVID-19 have eased, Canadians continue to eat at home more often than they did before the pandemic. Loblaw executives expect that trend may taper off in the second half of this year.

Sales at the company’s Shoppers Drug Mart chain and other drugstores also increased, driven by pharmacy services such as COVID-19 vaccinations and testing, as well as stronger front-of-store sales. Cosmetics are selling well as people return to the office and have begun socializing more, and over-the-counter drug sales have grown as cold and flu cases have made a comeback.

Drug retail same-store sales – an important metric that tracks sales growth not tied to new store openings – grew by 5.2 per cent in the quarter. Food same-store sales increased by 2.1 per cent.

E-commerce purchases softened somewhat compared with a period of heightened demand in the prior year, when sales more than doubled. Online sales fell by 9.8 per cent in the first quarter.

Net earnings available to common shareholders grew to $437-million, or $1.30 per share in the 12 weeks ending March 26, compared with $313-million, or 90 cents per share in the same period last year.

Loblaw boosted its quarterly dividend to 40.5 cents per common share, up from 36.5 cents, its 11th consecutive annual increase.

The retailer, which is based in Brampton, Ont., reported on Wednesday that its first-quarter revenue grew by 3.3 per cent to $12.3-billion.

Activist investor vows to continue climate push after Enbridge shareholders reject proposal

An activist investor failed in its bid to get Enbridge Inc. ENB-T +2.18%increase to strengthen its climate promises on Wednesday, but will continue its push to hold Canadian energy companies and banks to account for their net-zero goals.

It was the latest attempt by activists to get shareholders to help press large corporations to improve their climate action. Earlier this year, for example, a group called Médac submitted proposals to Canada’s seven largest banks urging shareholders to back regular advisory votes on environmental policy and targets.

Wednesday’s proposal, tabled at the energy company’s annual general meeting, requested that Enbridge strengthen its decarbonization commitments by the end of the year and make those goals “consistent with a science-based, net-zero target.”

The proposal was tabled by DI Foundation – a small, B.C.-based charity that holds a handful of Enbridge shares.

The foundation was represented by Investors for Paris Compliance, a non-profit that wants to use shareholder pressure to improve accountability around Canadian public companies’ net-zero plans.

For now, it’s targeting the energy sector and banks. But corporate engagement director Duncan Kenyon told The Globe and Mail the team plans to expand to other parts of the Canadian economy. And it wants eventually to purchase stocks to get the ear of companies itself.

For now, it’s playing the long game by talking with shareholders, and getting its name in front of investors.

Mr. Kenyon acknowledged that Investors for Paris Compliance doesn’t have billions of dollars at stake in its relationship with the companies it’s targeting, unlike some shareholders, who hesitate to give up their opportunity for one-on-one conversations with a chief executive officer by “throwing a proposal on the table that really challenges their business model.”

“That being said, some of those same investors – while they may not want to be the front for this proposal – are very supportive of the proposal,” he said.

About a quarter of them voted in support of the proposal on Wednesday – a result Mr. Kenyon called “encouraging.”

That was even though the board urged shareholders to vote no, arguing in a March management circular that the net-zero framework for midstream oil and gas is still evolving, so “it would be imprudent” for Enbridge commit to future decarbonization guidelines until more work is done and can be assessed alongside the company’s current goals.

Adopting the proposal would amount to “immediate, radical change” that would destroy shareholder value, the board said, adding that Enbridge’s current net-zero strategies “and a deliberate and prudent approach to the energy transition is the best course of action.”

Mr. Kenyon acknowledged that Enbridge has net-zero goals, but said spending to meet those promises comprises only a small fraction of the company’s capital expenditures.

“It’s very consistent with the entire energy sector,” he said. “They don’t want to admit yet that the market for their product will need to be in sharp decline for us to not cook the planet.”

Enbridge spokesperson Jesse Semko told The Globe in an e-mail after the AGM that the company has engaged with various groups to help develop a framework for the midstream sector. Once that’s done, he said, Enbridge “will fully evaluate it and assess whether our current targets need amending.”

Mr. Semko added that the company evaluates all capital expenditures “in the context of the energy transition to ensure they align with our emission-reduction targets.”

Oil giant Shell reports soaring first-quarter profits, raises dividend

• Shell’s results follow soaring profits seen across the oil and gas industry, even as many energy majors incur costly write-downs from exiting Russia.
• U.K. rival BP on Tuesday announced plans to boost share buybacks after first-quarter net profit jumped to its highest level in more than a decade.
• Shell reported a sharp upswing in full-year profit in 2021 on rebounding oil and gas prices, with CEO Ben van Beurden hailing it as a “momentous year” for the company.

Magna Announces First Quarter 2022 Results

• Global light vehicle production was down 7%, largely due to 16% decrease in Europe
• Sales of $9.6 billion decreased 5%
• Diluted earnings per share and adjusted diluted earnings per share decreased 40% and 31%, respectively
• Reduced 2022 outlook to reflect expected lower light vehicle production assumptions and an increase in production input costs

https://www.globenewswire.com/news-release/2022/04/29/2432296/0/en/Magna-Announces-First-Quarter-2022-Results.html

Dow rallies 900 points as investors bet the Fed can slow inflation without causing a recession

Stocks jumped sharply on Wednesday in a relief rally from their 2022 doldrums after the Federal Reserve raised rates by a widely anticipated half percentage point and Chairman Jerome Powell ruled out getting even more aggressive in the central bank’s inflation-fighting campaign.

The Dow Jones Industrial Average rose 932.27 points, or 2.81%, to close at 34,061.06. The S&P 500 gained 2.99% to 4,300.17. The tech-heavy Nasdaq Composite jumped 3.19% to 12,964.86. It was the biggest gain since 2020 for both the S&P 500 and the Dow.

CNBC

The central bank announced that it was hiking its benchmark interest rate 50-basis-points, or 0.5 percentage point, and would start reducing its balance sheet in June. That is the biggest rate increase since 2000 for the Fed, but the move was widely expected by investors.

Stocks moved sharply higher when Powell said the central bank was not considering an even more aggressive hike in future meetings.

“So a 75-basis-point increase is not something that committee is actively considering,” Powell said. “I think expectations are that we’ll start to see inflation, you know, flattening out.”

That statement helped take some of the fear out of the market, said Kim Forrest, founder of Bokeh Capital.

″“I think taking that off the table … was wise and is probably cause for some of the relief,” Forrest said.

The rate hike and rally follow a brutal April for stocks, which dragged the Nasdaq into bear market territory. The S&P 500 entered Wednesday more than 13% below its record high. Both of those indexes hit their lowest levels of the year earlier this week.

Former Goldman Sachs President Gary Cohn told CNBC’s “Closing Bell” that Powell “drove it right down the middle of the road” during his news conference.

“I think the market is starting to say, ‘OK. We’ve got this pretty well priced in.’ I don’t think there’s a lot of surprises out there. We’ve taken a lot of the fluff out of the market. We’ve taken a lot of the hot air out of the market. … We’ve now got some real value,” Cohn said.

Powell said he believed the Fed could slow economic growth without causing a jump in unemployment, citing the high number of job vacancies and strong household balance sheets.

“I would say we have a good chance to have a soft, or soft-ish, landing,” Powell said.

Fed raises rates by half a percentage point — the biggest hike in two decades — to fight inflation

• The Federal Reserve increased its benchmark interest rate by half a percentage point, in line with market expectations.
• In addition, the central bank outlined a program in which it eventually will reduce its bond holdings by $95 billion a month.
• The rate move is the largest since 2000 and is in response to burgeoning inflation pressures.
• Fed Chairman Jerome Powell underlined the commitment to bringing inflation down but indicated that raising rates by 75 basis points at a time “is not something the committee is actively considering.”

The Fed is expected to raise rates by a half point. Investors wonder if it will get more aggressive

• The Federal Reserve is expected to raise interest rates Wednesday for the second time since 2018, boosting the fed funds target rate by a half-percentage point.
• The central bank is also expected to launch a program to reduce its massive bond holdings by $95 billion a month, starting in June.
• The markets are braced for a hawkish Fed, but many investors are wondering if Fed Chair Jerome Powell will signal that the central bank is willing to get even tougher with rate increases.

The Federal Reserve is widely expected to raise its fed funds target rate by a half-percentage point Wednesday, but investors will be more focused on whether it signals it could get even tougher with future rate hikes.

The Fed also is expected to announce the start of a program to wind down its roughly $9 trillion balance sheet by $95 billion a month, starting in June. The 50-basis-point hike would put the fed funds target rate range at 0.75% to 1%. A basis point equals 0.01%.

That target rate after this week’s boost would be well off zero, but way below market expectations for a funds rate above 2.8% by year-end.

TEHRAN, Iran (AP) — The Taliban members who killed her activist husband offered Zahra Husseini a deal: Marry one of us, and you’ll be safe.

Husseini, 31, decided to flee. Through swaths of lawless flatlands she and her two small children trekked by foot, motorcycle and truck until reaching Iran.

As Afghanistan plunged into economic crisis after the United States withdrew troops and the Taliban seized power, the 960-kilometer (572-mile) long border with Iran became a lifeline for Afghans who piled into smugglers’ pickups in desperate search of money and work.

But in recent weeks the desert crossing, long a dangerous corner of the world, has become a growing source of tension as an estimated 5,000 Afghans traverse it each day and the neighbors — erstwhile enemies that trade fuel, share water and have a tortured history — navigate an increasingly charged relationship.

In past weeks, skirmishes erupted between Taliban and Iranian border guards. Afghans in three cities rallied against Iran. Demonstrators hurled stones and set fires outside an Iranian Consulate. A fatal stabbing spree, allegedly by an Afghan migrant, at Iran’s holiest shrine sent shockwaves through the country.AFGHANISTANAs Iran-Taliban tensions rise, Afghan migrants in tinderboxCombat death puts spotlight on Americans fighting in UkraineBiden seeks $33B for Ukraine, signaling long-term commitmentPowerful explosion at Kabul mosque kills at least 10 people

Political analysts say even as both nations do not want an escalation, long-smoldering hostilities risk spiraling out of control.

“You have one of the world’s worst-simmering refugee crises just chugging along on a daily pace and historical enmity,” said Andrew Watkins, senior Afghanistan expert at the United States Institute of Peace. “Earthquakes will happen.”

The perils are personal for Afghans slipping across the border like Husseini. Since the Taliban takeover, Iran has escalated its deportations of Afghan migrants, according to the U.N. migration agency, warning that its sanctions-hit economy cannot handle the influx.

In the first three months of this year, Iran’s deportations jumped 60% each month, said Ashley Carl, deputy chief of the agency’s Afghanistan mission. Many of the 251,000 returned from Iran this year bear the wounds and scars of the arduous trip, he said, surviving car accidents, gunshots and other travails.

Roshangol Hakimi, a 35-year-old who fled to Iran after the Taliban takeover, said smugglers held her and her 9-year-old daughter hostage over a week until her relatives paid ransom.

“They would feed us with polluted water and hard, stale bread,” she said. “We were dying.”

The lucky ones land in the jumble of Tehran, squeezing into dank and crowded alleyways. Iran estimates at least a million Afghans have sought refuge in the country over the last eight months.

Like many, Husseini lives in legal limbo, vulnerable to harassment and exploitation. Her boss at the tailor’s shop refuses to pay her salary. Her landlord threatens to kick her out. She can barely cobble together enough cash to feed her children.

“We have nothing and nowhere to go,” she said from a cramped room in southern Tehran, furnished with just a donated gas heater, chairs and a few velour blankets.

As more Afghans arrive, helping them gets harder. Iranian Foreign Ministry spokesman Saeed Khatibzadeh lamented last month that “waves of displaced Afghans cannot continue to Iran” because Iran’s “capacities are limited.” Iran’s youth unemployment hovers over 23%. Iran’s currency, the rial, has shriveled to less than 50% of its value since 2018.

“The biggest challenge is that Iran is not ready for the new situation of refugees,” Tehran-based political analyst Rea Ghobeishavi said of the increasing friction between Afghans and Iranians.

Iran has grown more anxious as a string of bloody attacks in Afghanistan targeting the country’s minority Hazara Shiites makes clear that extremist threats proliferate despite Taliban promises to provide security.

“There are reports that some extremists are entering Iran easily with refugees,” said Abbas Husseini, a prominent Afghan journalist in Tehran, describing mounting paranoia in Iran.

Last month, Iran’s most sacred Shiite shrine in the northeastern city of Mashhad turned into a scene of carnage when an assailant stabbed three clerics, killing two — a rare act of violence at the compound. The attacker was identified in media as an Afghan national of Uzbek ethnicity.

In the following days, a surge of videos agitating against Afghan refugees flooded Iranian social media. Impossible to authenticate, the grainy clips — footage showing Iranians insulting and beating up Afghans — have been dismissed as misleading in Iran but in Afghanistan have dominated headlines, stoking public fury.

Demonstrators attacked the Iranian Consulate in the western city of Herat with stones and protested at Iran’s Embassy in Kabul. “Stop killing Afghans,” pleaded protesters in the Afghan capital. “Death to Iran,” chanted crowds in Herat and the southeastern Khost province. Iran suspended all of its diplomatic missions in Afghanistan for 10 days.

Even as the gate of its consulate smoldered, Iran’s special envoy for Afghanistan deflected. Hassan Kazemi Qomi blamed the escalating tensions on a vague “enemy” seeking to subvert the nations’ relations. Afghan Foreign Minister Amir Khan Muttaqi raised his concerns with the Iranian ambassador.

“The ill-treatment of Afghan refugees in Iran adversely affects relations between the two countries … allowing antagonists to conspire,” Muttaqi was quoted as saying.

His careful tone betrays a troubled history.

In 1998, Iran nearly went to war against the Taliban after 10 of its diplomats were killed when their consulate was stormed in the northern city of Mazar-e-Sharif. But after the U.S.-led invasion, Tehran’s Shiite leaders grew wary of the American military presence on their doorstep and took a more pragmatic stance toward the Sunni militant group.

Now, analysts say, with both nations severed from the global banking system and starved for cash, they have come to depend on each other. Neither wants to see tensions mount further.

“Through neighbors, Iran can sanctions-bust, exchange currency, barter and keep its economy alive,” said Sanam Vakil, deputy director of Chatham House’s Middle East and North Africa Program.

But the neighbors nearly came to blows last week when Taliban guards tried to pave a new road across the border. Iranian guards went on high alert. The vital crossing closed.

Aware of the stakes, the countries are vigorously pursuing diplomacy. Last week, Khatibzadeh promised Tehran would accredit Taliban diplomats for the first time to help process the mountains of consular cases. Taliban officials visited the capital to discuss Iran’s treatment of Afghan refugees.

Many of those refugees fleeing Afghanistan’s repression and destitution harbor humble dreams: of scraping by as construction laborers, factory workers and farmhands in Iran.

Others, like Hakimi’s 9-year-old daughter Yasmin, hope to continue on to Europe. She fantasizes about Germany. Her father, a police officer killed by the Taliban in Logar province, instilled in her the importance of an education, she said.

“We don’t want to have a bad future,” Yasmin said from her dilapidated Tehran apartment. “We want to become literate people, like my father.”

EU energy ministers meet to discuss Russian gas, sanctions

European Union energy ministers will meet Monday to discuss Russia’s decision to cut gas supplies to Bulgaria and Poland, and debate planned new sanctions over Moscow’s war on Ukraine.

The 27 nation-bloc has imposed five rounds of sanctions on Russian officials, oligarchs, banks, companies and other organizations since Russian troops invaded Ukraine in February.

The European Commission is working on a sixth round of measures which could include oil restrictions, but Russia-dependent countries like Hungary and Slovakia are wary of taking tough action.

Germany believes it could cope if supplies of Russian oil were cut off due to an embargo or action by Moscow. Economy Minister Robert Habeck said that Russian oil now accounts for 12% of total imports, down from 35% before the war, and most of it goes to the Schwedt refinery near Berlin.

Habeck acknowledged that losing those supplies could result in a “bumpy” situation for the capital and surrounding region, with price hikes and shortages, but that wouldn’t result in Germany “slipping into an oil crisis.”

Still, Habeck added, “other countries aren’t so far yet and I think that needs to be respected.”RUSSIA-UKRAINE WARLive updates l Finland ends deal for Russian nuclear plantEU energy ministers meet to discuss Russian gas, sanctionsUkraine city awaits 1st evacuees from Mariupol steel plantFigure skating body details proposal to hike age limit to 17

The commission, the EU’s executive branch, could announce it new sanction proposals later this week. The measures would have to be approved by the member countries – a process that can take several days.

The energy ministers will also look at what steps to take should Russia ramp up its pressure by cutting gas supplies to other countries.

The EU imports around 40% of the gas it consumes from Russia, but some member countries are more heavily dependent on Russian supplies than others.

In a move last week branded in Europe as “blackmail,” Russian energy giant Gazprom cut supplies to Bulgaria and Poland. It came after Russian President Vladimir Putin said that “unfriendly” countries must start paying for gas in rubles, Russia’s currency.

Bulgaria and Poland have refused to do so, like most EU countries. More Gazprom bills are due on May 20, and the bloc is wary that Russia might turn off more taps then. Russia rejects the claims of blackmail and says that Bulgaria and Poland missed their payment deadlines.

The commission has warned that companies which comply with the terms of Putin’s decree insisting that companies convert euros to rubles through two accounts at Gazprombank would contravene the bloc’s sanctions.

Despite the pressure, Europe does have some leverage in the dispute since it pays Russia $400 million a day for gas, a huge dent in Moscow’s coffers should it opt for a complete cutoff.

Off the Dutch North Sea coast, meanwhile, a fuel tanker stood idle at anchor after port workers in Amsterdam said they would not unload its cargo of Russian diesel. The Marshall Islands-flagged Sunny Liger was initially scheduled to unload in Sweden, but dockers there refused to carry out the work.

Dutch port employees who are members of the FNV dockers’ union say they also refused to unload the tanker out of solidarity with their Swedish colleagues. Union spokeswoman Asmae Hajjari told NOS Radio 1 over the weekend that “the ship is not welcome.”

Asia-Pacific stocks lower as data show Chinese factory activity contracted in April

• Asia-Pacific stocks slipped on Monday.
• Chinese economic data released over the weekend showed a contraction in April factory activity.
• Markets in Hong Kong, mainland China, Singapore and Taiwan were closed on Monday for a holiday.