A survey of North American equities heading in both directions
On the decline
Enbridge (ENB-T) closed down 0.3 per cent after it said on Thursday it would build and operate crude oil and natural gas pipelines in the U.S. Gulf of Mexico for the recently sanctioned Kaskida oil hub, operated by British oil major BP (BP-N).
Separately, Shell announced the final investment decision for its Rome Pipeline, which would export the oil produced from the Kaskida project.
BP’s sixth operating hub, Kaskida, has oil production slated to start in 2029 and features a new floating production platform with a capacity to produce 80,000 barrels per day from six wells in the first phase.
The company’s U.S. Gulf of Mexico output averaged 300,000 barrels of oil and gas per day in 2023, with the company targeting 400,000 bpd by 2030.
Enbridge’s crude oil pipeline would be called the Canyon Oil Pipeline System, with a capacity of 200,000 bpd.
Its natural gas pipeline would be named Canyon Gathering System with a capacity of 125 million cubic feet per day and would connect subsea to Enbridge’s offshore existing Magnolia Gas Gathering Pipeline.
The pipelines are expected to be operational by 2029 and would cost $700-million, the Canadian firm said.
Shell’s Rome Pipeline, projected to begin operations in 2028, would increase access between the company’s Green Canyon Block 19 pipeline hub and the Fourchon Junction facility on the Louisiana Gulf Coast.
Toronto-based Colliers International Group (CIGI-T) was 2.5 per cent lower after announcing its engineering unit, Englobe, has acquired Goodkey, Weedmark & Associates, a building engineering consulting firm.
“The addition will strengthen Englobe’s scale and service capabilities in Canada’s largest market. GWAL’s leadership team will become shareholders of Englobe under Colliers’ unique partnership model,” it said. “The business will be fully integrated into Englobe’s operations and will rebrand as Colliers in the future.
Terms of the deal were not disclosed.
A day after its shares fell 3.5 per cent in the wake of reporting a smaller-than-expected rise in third-quarter deliveries, indicating that incentives and financing deals have not sufficiently attracted customers, Tesla Inc. (TSLA-Q) saw further declines as it said on Thursday it would recall most Cybertrucks in the U.S. due to delayed rear-view camera images that could impair driver visibility and increase crash risks, adding that a software update would resolve the issue.
The recall covers more than 27,000 Cybertrucks, Tesla said in a report filed with the U.S. National Highway Traffic Safety Administration.
Also weighing on investor sentiment was the fact its most affordable Model 3 compact sedan was no longer available for order in the U.S., according to the EV maker’s website.
The Model 3 Standard Range Rear-Wheel Drive, priced at US$38,990, uses lithium iron phosphate (LFP) battery cells sourced from China.
The U.S. recently announced higher tariffs on Chinese imports, including a 100-per-cent tariff on EVs and 25 per cent on EV batteries and key minerals.
Additionally, vehicles that contain Chinese-made components, such as LFP battery cells, are ineligible for the US$7,500 federal tax credit provided by the government.
Stellantis CEO Carlos Tavares pledged on Thursday to keep its dividend and share buyback program in place this year, but did not rule out cuts in 2025, as investors worry that the carmaker’s financial woes will hamper future payouts.
Stellantis’ shares (STLA-N) slid in both New York and Europe after a profit warning this week sparked concerns over its dividend payouts and buybacks.
“Our commitments were made for 2024 and they will be kept. The time for 2025 has not come, we will see what will happen at the end of 2024 for a discussion and a decision for 2025,” Tavares said on the dividend policy during a visit to a factory in southern France.
Shares in the owner of the Chrysler, Jeep, Fiat, Citroen and Peugeot brands have fallen more than 43 per cent this year, making them the worst performers among European automotive stocks.
Kevin Thozet, a member of the investment committee at Carmignac, said European automakers were “falling like autumn leaves,” with Stellantis’ profit warning meaning a zero operating margin in the second half of this year.
“This is a real blow to the investment thesis, as it could put the generous dividend at risk and will very likely imply saying ‘bye bye’ to buybacks,” Mr. Thozet said.
Asked about possible changes to its dividend and buyback policies, Stellantis on Thursday pointed to remarks by its Investor Relations head Ed Ditmire in an analyst call earlier this week.
“It’s too early in the year for the questions on capital return,” Mr. Ditmire said on the call, adding the group’s dividend policy was “clear” with a 25-per-cent to 30-per-cent payout on net income and a willingness to move it to the high end of that range.
Barclays downgraded the stock to “equal-weight” from “overweight” and cut its 2024-26 EBIT (operating profit) estimates by 33-45 per cent. It said Stellantis’ large free cash flow cut raised questions over its dividend and buy-back potential.
“We got wrong-footed on Stellantis, being too slow to acknowledge its U.S. inventory issue and eroding EU/U.S. market shares,” Barclays analysts said in a note.
Levi Strauss (LEVI-N) said on Wednesday it was considering a sale of its underperforming Dockers brand and forecast fourth-quarter revenue below expectations, sending its shares down.
The denim maker, which is looking to bolster growth of its namesake Levi’s brand and activewear category Beyond Yoga, has announced a strategic review of Dockers, a maker of chinos and khakis, which has been hurt by cautious spending in Europe and the U.S.
“We are narrowing our focus to realize the full potential of the Levi’s brand as well as accelerate Beyond Yoga. Accordingly, we are undertaking an evaluation of strategic alternatives for the global Dockers business,” CEO Michelle Gass said on a post-earnings call.
Levi is in the midst of a turnaround strategy to operate mainly by offering tighter assortment that focuses on core denim clothing and achieve major sales through its direct-to-consumer stores at full prices.
The company had already exited businesses that have not fetched much, such as the Denizen brand and its footwear category, in some regions as part of its cost cut plans, which also included layoffs.
This helped the company post third-quarter adjusted profit per share of 33 US cents, topping expectations of 31 US cents, according to analysts’ estimates compiled by LSEG.
As part of the strategic review process of Dockers, the company has retained Bank of America as its financial adviser and has not set a deadline or definitive timetable for its completion.
Sales of Dockers saw a 15-per-cent decline in the third quarter. The brand contributed about 5 per cent to the reported quarter’s total revenue of US$1.52-billion, which missed analysts’ estimates of US$1.55-billion.
But Levi’s sales are seeing a boost from its direct-to-consumer channel push with the segment posting a 10-per-cent jump in sales, driven by strong demand for women’s clothing, particularly denim dresses and jumpsuits, sold mostly at full prices.
“Dockers is a brand that has been out of step with consumer trends for some time ... She (Gass) is positioning Levi Strauss to stick to what it knows best,” said eMarketer analyst Zak Stambor.
Corona beer maker Constellation Brands (STZ-N) beat second-quarter results estimates on Thursday, as robust demand for its popular beer brands helped soften the hit from a slump in its wines and spirits business.
The company has seen persistent demand in the beer segment, its major revenue driver, as consumers continued to spend on its light-bodied beer categories of Modelo Especial and Pacifico varieties.
Meanwhile, its wines and spirits business has struggled with weaker sales for several quarters, particularly at retailers, following which the company earlier last month said it will take a US$2.5-billion write-down for the unit in the reported quarter.
In September, Constellation also lowered its annual net sales growth forecast to between 4 per cent and 6 per cent from an earlier range of 6 per cent to 7 per cent.
Constellation’s shares were down after it reaffirmed its annual adjusted profit and sales forecast.
Constellation’s peer, Jack Daniel’s maker Brown-Forman , missed its first-quarter profit and revenue estimates in August on higher input costs and weaker demand.
The Victor, New York-based company’s reported second-quarter adjusted earnings per share of US$4.32 in the quarter ended Aug. 31, beating analysts’ average estimate of US$4.08, according to data compiled by LSEG.
Its net sales grew about 3 per cent to US$2.92-billion from a year ago, while also edging past expectations.
Bank of America (BAC-N) declined after Berkshire Hathaway (BRK-A-N, BRK-B-N) unloaded more of its stock this week, boosting sales since mid-July to nearly US$10-billion as Warren Buffett simplifies part of his conglomerate’s vast portfolio.
In a regulatory filing on Wednesday night, Berkshire said it sold 8.55 million Bank of America shares this week for about US$337.9-million. It has sold about 238.7 million shares, or about 23 per cent of its holdings, since mid-July.
Berkshire still owns about 10.2 per cent of the second-largest U.S. bank, or a slightly higher percentage if Bank of America has yet to disclose recent stock buybacks.
It must continue reporting sales until and including the sale that drives its stake below 10 per cent.
Thereafter, investors must likely wait for Berkshire’s quarterly financial reports or quarterly stock holdings disclosures to learn if the Omaha, Nebraska-based company sold more.
The U.S. Securities and Exchange Commission requires shareholders that own more than 10 per cent of a company to disclose stock purchases and sales within two business days.
Berkshire’s selling reduces to a more manageable size what had been its second-largest stock holding, which originated in a US$5-billion investment in 2011.
The company also more than halved its largest stock holding, Apple, in the year’s first half.
Mr. Buffett, 94, tied up another loose end this week when the company agreed to buy the 8 per cent it did not already own of its energy and utility business Berkshire Hathaway Energy from the estate of billionaire philanthropist Walter Scott.
Berkshire ended June with US$276.9-billion of cash. It will spend US$2.37-billion of cash in the Berkshire Hathaway Energy transaction.
Buffett has run Berkshire since 1965. His conglomerate’s dozens of businesses include the BNSF railroad, Geico car insurance, and smaller operations such as Dairy Queen and See’s Candies
NIO Inc. (NIO-N) and Li Auto Inc. (LI-Q) slid ahead of a European Union vote to apply additional duties on imported electric vehicles made in China on Friday.
In September it cut the proposed final tariffs on Tesla and slightly trimmed rates for others after taking into account submissions by the companies in its anti-subsidy investigation.
France, Greece, Italy and Poland are expected vote on Friday to impose tariffs of up to 45 per cent on Chinese EV imports, enough to get EU proposal passed.
With files from staff and wires