Here are five things you need to know this morning:
Air Canada profit comes in for a hard landing: Air Canada reported a 47 per cent drop in quarterly profits in the second quarter, as more competition and softening demand combined to hit margins. Revenue at the flag carrier came in at $5.5 billion for the quarter. That’s an increase of two per cent from last year’s level. But adjusted profits came in at 98 cents per shares. That’s almost half the $1.85 seen last year. Air Canada’s numbers are in keeping with what we’ve seen out of U.S. airlines in recent weeks, where carriers have been discounting fares to deal with excess capacity. Air Canada says it expects its available seat miles to expand by 6.5 per cent this year. That’s below the eight per cent they forecast just last month when the company warned its profitability was being stretched by the race to the bottom in fares. Air Canada shares have lost 12 per cent so far this year and a halving of profit will likely do little to reverse that trend.
Shopify beats on revenue and profit: Canadian e-commerce giant Shopify reported second-quarter results premarket that beat analyst expectations on revenue and profit. Revenue grew 21 per cent to US$2.05 billion, above the $2 billion Bay Street was looking for. And profit came in at 26 cents per share, better than the 20 cents that analysts were expecting. The company forecasts that revenue growth for the current quarter will be in the low to mid-twenties. That’s in line with the 21 per cent consensus expectation. The company trades on the TSX and in New York, where the U.S.-listed shares were up by as much as 14 per cent at one point this morning premarket.
First Quantum trimming work hours at shuttered Panama mine: TSX-listed First Quantum Minerals Ltd. is trimming working hours at its idled copper mine in Panama in a bid to rein in the cost of preserving the site, and up pressure on the local government to get things moving again. The company will reduce “extraordinary hours” available to workers and end activity on Sundays starting next weekend, according to a union statement. Since the start of the year, the company has spent US$115 million on care and maintenance at the site that was ordered closed late last year by a now-ousted Panamanian government. The new regime has sounded a bit more conciliatory to finding a solution, and has asked the company to drop arbitration proceedings against the government.
Disney hiking streaming fees by 25% — but not in Canada for now: Disney released quarterly profits this morning and the numbers showed the entertainment giant is seeing weakness in its theme park business, but its movie unit has returned to profitability. The most interesting segment for the company continues to be its streaming business, where Disney+ finally swung to a profit. The company seems to be leaning into that segment for its future, too, as it raised the prices for streaming customers by a whopping 25 per cent. The ad-supported version jumped bya quarter to US$9.99 a month while the ad-free version will soon cost $15.99 a month, an increase of 14 per cent. The company confirmed to BNN Bloomberg in an email that the price increases are only for U.S. customers, but it’s hard to imagine the new prices won’t come North sooner or later. Faced with the relentless pressure to increase revenue in a streaming business showing signs of maturation, Disney CEO Bob Iger is clearly taking the familiar tack of trying to generate growth out of existing customers instead. As Disney icon Bandit Heeler would say: “Gotta be done.”
Bank of Canada set to reveal summary of deliberations for rate cut meeting: The Bank of Canada will provide a glimpse into its thought process this afternoon when it releases its summary of deliberations from its recent policy meeting on interest rates. The bank decided to cut at that meeting, sot it will be interesting to get a little more detail on what factors weighed most on their decision–making process. Depending on the tone of the deliberations, we might get a pretty good inkling as to which way the bank is leaning heading into its next policy meeting in September. Currently the swaps market is pricing in a 100 per cent chance of another rate cut, but given volatility on equity markets and the looming Canadian jobs number coming on Friday, the situation is very much fluid.