Apple faces worst iPhone slump since Covid as rivals rise

Vlad Savov, Bloomberg News

Apple Inc.’s iPhone shipments slid a worse-than-projected nearly 10 per cent in the quarter ended in March, reflecting flagging sales in China despite a broader smartphone industry rebound.

The company shipped 50.1 million iPhones in the first three months of the year, according to market tracker IDC, falling shy of the 51.7 million average analyst estimate compiled by Bloomberg. The 9.6 per cent year-on-year drop is the steepest for Apple since Covid lockdowns snarled supply chains in 2022, the researchers said.

The Cupertino, California-based iPhone maker has struggled to sustain sales in China since the debut of its latest model in September. The resurgence of rivals from Huawei Technologies Co. to Xiaomi Corp. and a Beijing-imposed ban on foreign devices in the workplace have all weighed on sales. The IDC data provides the first snapshot of the global performance of Apple’s most important product ahead of earnings on May 2.

Shares were down less than one per cent in premarket trading in New York on Monday.

The drop in iPhone shipments is significant given the overall mobile market registered its best growth in years. Smartphone makers shipped 289.4 million handsets in the period, marking a 7.8 per cent rise from the trough of a year ago, when many manufacturers were grappling with a surfeit of unsold devices. Samsung Electronics Co. regained the top spot in the March quarter, while budget-focused Transsion increased shipments by 85 per cent and Xiaomi bounced back to close the gap on second-place Apple.

“The smartphone market is emerging from the turbulence of the last two years both stronger and changed,” said Nabila Popal, research director at IDC. “While Apple has been super resilient and seen a lot of growth in shipments and share over the last few years, it will be a challenge for it to maintain the pace of growth and the peak share it saw in 2023. As the market recovers further in 2024, IDC expects Android to grow much faster than Apple.”

Prominent Apple suppliers Hon Hai Precision Industry Co., Murata Manufacturing Co. and LG Innotek Co. fell in Asia trading on Monday, amid a broader selloff on fears of escalating conflict in the Middle East.

What Bloomberg Intelligence says

• Xiaomi’s 1Q handset shipments of 40.8 million units, according to IDC, jumped 33.8 per cent year over year while both Apple and Samsung declined. Its strong handset sales were likely driven by a recovery in its overseas market and might lead to high-teens sales growth in the first quarter.

- Steven Tseng and Sean Chen, analysts

During the pandemic, Apple’s iPhone showed the greatest resilience as consumers pulled back from purchases of smartphones by most of its Android-powered rivals. That inventory buildup led to aggressive pricing by Chinese competitors like Xiaomi, which took months to deplete stocks and are now starting to ramp shipments back up. Huawei’s surprise return to prominence last year — with its own made-in-China chip and HarmonyOS operating system on the Mate 60 series — has been eroding Apple’s share of China’s premium market since August.

“Increased competition in China is a big part of Apple’s decline in Q1,” Popal said. Elsewhere, a number of regions started the year with excess iPhone inventory after heavy shipments in the final months of 2023, she added.

Average selling prices for handsets are rising, as consumers increasingly opt for premium models that they intend to hold on to for longer, IDC’s researchers found. Apple, which consistently maintains the highest ASP in the industry, has led the way in this, with consumers showing a distinct preference for its higher-tier models. Still, the company has this year resorted to unusual discounts to spur sales, with some retail partners in China taking as much as US$180 off the regular price.

In March, Apple opened a large new store in the center of financial hub Shanghai, with Chief Executive Officer Tim Cook in attendance. China is host to the company’s biggest retail network outside the U.S. and accounts for roughly a fifth of sales, largely driven by the iPhone. Many of the attendees who spoke to Bloomberg at the Shanghai event had acquired their iPhones more than two years ago. And while those Apple fans said they intended to remain within the company’s ecosystem, some said they would also consider Huawei’s Mate 60 successor or foldable device options from rivals.

Quebec employers group worried 'politicized' immigration debate will hurt jobs

Morgan Lowrie, The Canadian Press

The latest spat between Quebec and Ottawa over immigration is based on politics and not the reality of the labour market, says the head of a major employers group.

"In some ways, it's deplorable," said Karl Blackburn, president and CEO of the Conseil du patronat du Québec.

His comments come as Quebec Premier François Legault is threatening to hold a "referendum" on immigration if the federal government doesn't take rapid action to stem the rising number of temporary immigrants, which include foreign workers, international students and refugee claimants.

"The majority of Quebecers think that 560,000 temporary immigrants is too much," Legault said last week. "It’s hurting our health-care system. We don’t have enough teachers, we don’t have enough housing."

Provincial Immigration Minister Christine Fréchette said the province's demands include stronger French-language requirements in immigration programs managed by the federal government and a reduction in the number of asylum seekers and temporary workers.

While Prime Minister Justin Trudeau rejected the province's bid for full control over immigration — currently a shared responsibility — Legault said in March that his federal counterpart had showed openness to some of the province's demands, and agreed with him on the need to reduce temporary immigrants.

Blackburn, however, disagrees that there are too many temporary workers, who he said are "working in our businesses producing goods and services." Their numbers, he added, reflect the needs of the labour market and of an aging society.

He said he supports the Legault government's call to reduce the number of asylum seekers in the province because Quebec has received a disproportionate share in recent years. But he denounced the federal government's "improvised" decision to suddenly reimpose visas on some Mexican nationals earlier this year, a measure Quebec had pushed for as a way of reducing asylum claims.

He said that's already having "direct effects" on businesses by restricting their ability to bring in workers. Any subsequent measures to reduce the number of temporary workers will further hurt Quebec's economy as well as consumers who will no longer have access to the same goods and services, he said.

"It's as if our governments knowingly agreed to cause companies to lose contracts for reasons of political partisanship and not based on economic growth, which is nonsensical in a way," Blackburn said.

Politicians are unfairly blaming immigrants for shortages of housing, daycare spaces and teachers, when the real problem is government failure to invest in those areas, he added.

The long-running debate between Quebec and Ottawa has flared in recent months. Earlier this year, the premier wrote to Trudeau about the influx of asylum seekers entering Quebec, which has welcomed more than 65,000 of the 144,000 would-be refugees who came to Canada last year.

Quebec has demanded Ottawa reimburse the province $1 billion — the amount Quebec says it has cost to care for asylum seekers over the last three years.

Federal Immigration Minister Marc Miller said last week that no country would ever give up total control over immigration. But he said he and his provincial counterpart are having good discussions and agree on many matters, including limiting visas to Mexicans and protecting French.

While Legault has blamed the federal government for the “exploding” number of newcomers, the director of a research institute and co-author of a recent study on temporary immigrants says both Ottawa and Quebec have brought in measures in recent years to facilitate their arrival.

Emna Braham says the surge in temporary immigrants is due to a combination of factors, including a tight labour market, post-secondary institutions recruiting internationally, and programs by both Ottawa and Quebec to allow companies to bring in more workers.

She said numbers have now climbed higher than either level of government expected, likely because temporary immigration is administered through a series of programs that are separate from one another.

“We had a set of measures that could be justified individually, but there was no reflection on what the impact will be of all these cumulative measures on the flow of immigrants that Quebec and Canada accept,” Braham said in a phone interview.

Quebec, meanwhile, says a way to reduce the number of temporary workers is to invest in technology.

"As we know, Quebec lags behind in terms of business robotization and automation. By investing in technologies, businesses will be able to increase their productivity while relying less on temporary workers," Fréchette said in a statement Monday.

Both Braham and Blackburn point out that the high number of temporary workers in Quebec is also a result of the province’s decision to cap the number of new permanent residents it accepts each year to around 50,000, creating a bottleneck of people awaiting permanent status.

"If the government of Quebec had set its thresholds at the level they should be to meet the needs of the labour market, we wouldn't be in this situation where (there) is a significant increase in temporary workers," Blackburn said.

Braham said the moment is right for provinces and the federal government to develop a coordinated approach to immigration, and to ensure a system is put in place to ensure both long- and short-term needs are met. 

This report by The Canadian Press was first published April 15, 2024.

 

'Zombie fires' smoldering near oil and gas wells threaten Canada's drillers

Robert Tuttle, Bloomberg News

(Bloomberg) -- Leftover blazes from last year’s record wildfire season in Canada are threatening to knock out almost 3% of the country’s natural gas production.

A total of 50 so-called zombie fires still smoldering beneath layers of snow are located near oil and gas wells and other production facilities, according to government data analyzed by Bloomberg News. Those sites yield natural gas equivalent to about 80,000 barrels a day of oil in Canada’s energy heartland of Alberta alone, in addition to almost 14,000 barrels a day of crude. 

Companies most at risk of disruptions include Tourmaline Oil Corp., the country’s biggest gas driller, as well as oil-sands giant Cenovus Energy Inc. and Paramount Resources Ltd. Smaller explorers could also be affected, including closely held Westbrick Energy Ltd.

Read more: Last Year’s Wildfires Are Still Burning Under Canada’s Snow

The residual blazes underscore how Canada’s energy industry -- underpinned by an oil-sands sector that produces some of the world’s dirtiest crudes — is increasingly imperiled by climate change. Usually hot, dry weather contributed to the country’s worst-ever wildfire season last year, darkening skies over New York and other US cities. And with over 65% of Canada abnormally parched or in drought at the end of March, the nation is bracing for another smoke-filled summer. 

Canada could be facing another catastrophic fire season this year as dangerously dry conditions combine with higher-than-normal temperatures buoyed by the El Niño weather pattern, according to a government forecast. Alberta declared the start of its its wildfire season this year on Feb. 20, the earliest in recent years. Zombie fires, along with new ones, could flare up as temperatures rise throughout the spring. 

The leftover fires burn into organic matter in the earth including into peat, which smolders easily and is difficult to extinguish. The blazes from 2023 aren’t generally as much of a threat as new conflagrations that emerge, but the large number of carryover fires this year is a problem, Alberta Wildfire spokeswoman Josee St-Onge said by phone. 

“The advantage is we know them and we have been working on them for a year,’’ she said, cautioning that the province is entering a period when blazes flare up. 

A representative for Cenovus said the company is building on what it learned last year to prepare for wildfires this season, including updating its fire program and completing risk assessments to ensure areas with excess vegetation are identified and mitigated. Spokespeople for Tourmaline and Paramount didn’t immediately respond to requests for comment.

For Westbrick, which shut in as much as 30,000 barrels of oil equivalent last year, the leftover fires are not a reason to be “overly concerned,” Chief Executive Officer Ken McCagherty said by phone. Much of the vegetation that fueled last year’s wildfires has been burned off, he said.

“We’re in a far, far better position this year than last year,” McCagherty said.

Chevron Corp., Canadian Natural Resources Ltd. and Baytex Energy Corp. at times shut production equivalent to about 300,000 barrels of oil a day combined last year as blazes encroached on wells and processing infrastructure, mostly in the western shale oil and gas producing regions along the British Columbia and Alberta border. The fires scorched about 4% of the country’s forests. 

That damage was dwarfed by the fire season of 2016, when more than 1 million barrels of daily oil output was shut during a devastating blaze that razed sections of Fort McMurray — the largest city near most producers’ oil-sands operations — and caused about C$3.7 billion in insured losses, making it Canada’s costliest natural disaster.

©2024 Bloomberg L.P.

Canada's Trans Mountain project seen spelling trouble for OPEC member Iraq

Robert Tuttle, Bloomberg News

Canada’s newest oil pipeline may spell trouble for a Middle Eastern country almost 7,000 miles away: Iraq.

The Trans Mountain pipeline’s expansion, which will almost triple Alberta oil-sands producers’ ability to ship their heavy crude to the Pacific Coast, will most directly affect a similar grade called Basrah Heavy that’s produced in OPEC member Iraq, Susan Bell, a Rystad Energy analyst, said in an interview. 

“When you look at the yield profile of that crude oil, the distillation profile of that crude oil, it’s very similar to Canadian heavy — so it’s very substitutable,” she said in Calgary. 

U.S. West Coast refiners that have relied on Basrah heavy and other crudes from the Middle East will have incentives to switch to Canadian oil, which is cheaper and located right next door, she said. Trans Mountain also will allow more Canadian oil to be shipped across the Pacific to Asia, where most Basrah Heavy is sold, potentially putting downward pressure on prices. 

Trans Mountain’s expansion — scheduled to start commercial operation on May 1 after years of delays and cost overruns — will allow as much as 890,000 barrels of crude a day from the Canadian oil-sands to be shipped to the Vancouver area for transport by tanker to foreign markets. 

The line promises to lessen Canada’s almost total dependence on the U.S. market, particularly refiners in the Midwest and Gulf Coast. The first two cargoes off the new line have been purchased by Chinese companies. 

The ability to reach new markets may reduce the discounts to the U.S. benchmark that Canadian crude sells for, with Bell estimating the differential narrowing by US$3 a barrel compared with if the expansion wasn’t built, Bell said. 

Trans Mountain also may shift geographical spreads for Basrah Heavy prices, such as the roughly $2-a-barrel premium the grade sells for in Singapore versus on the U.S. Gulf Coast, Bell said. That premium may shrink as Gulf Coast refiners seek more Basrah Heavy to replace the Canadian oil that Trans Mountain is allowing to flow to Asia as well as the Mexican crude that the government there is reducing exports of.

 

AI adoption, ad spending doubles among Canadian businesses: report

Ben Cousins, BNN Bloomberg

A new report suggests 32 per cent of Canada's small to medium-sized businesses (SMBs) have subscribed to ChatGPT to simplify their operations, more than double compared to a year ago.

The Canadian Business Spending Trends report from the business financial services company Float, found 14 per cent of Canadian SMBs had a subscription in the first quarter of 2023, but that figure had jumped to 32 per cent a year later.

Rob Khazzam, CEO and co-founder of Float, called the level of artificial intelligence adoption “encouraging.”

“We're seeing a huge increase in focus on automation and AI to unlock the efficiency and productivity of Canadian workers,” Khazzam told BNN Bloomberg in a television interview on Monday.  

“It's become much more mainstream. It was about a year (or) year and a half ago we saw the release of ChatGPT that took the world by storm. It was very novel at the time, but now almost a third of businesses on Float are using it in some form.”

Khazzam added that companies aren’t just using AI to tackle some of the more mundane parts of the job, but it can be found in tasks throughout a business.

“What we're seeing is across an organization, whether it's the CEO, administration, sales, marketing, operations, engineering,” he said.

“The applications are wide and broad and just feed into this concept and this narrative of Canadian businesses need to see their dollars go further.”

When broken down by sector, tech companies with a ChatGPT subscription jumped from 25 per cent to 50 per cent, while non-tech jumped from 12 per cent to 26 per cent.

The report also found that companies have kept their spending relatively flat throughout the year, except for advertising, which also doubled.

“We're definitely seeing flat spending over a year with the exception of advertising,” Khazzam said.

“We see still tight-to-the-belt with spending, but still investing for growth (among) larger businesses, and medium-sized businesses that we serve.”

Khazzam suggested the increased ad spending could be a sign that businesses are ready to rebound.

“It's been almost two years of more of a lacklustre business spending environment,” he said. “Businesses have made the headcount reductions … and are now maybe starting to put the pedal on the gas a little bit more.”

The report did find some economic trepidation among the companies, however, as overall average monthly spending only climbed by $2,200, a sign of caution according to Float.

Meanwhile, larger companies are showing signs of a rebound, as firms with more than $1 million in revenue saw spending jump 37 per cent year-over-year.

"SMBs are the lifeblood of Canada's economy, and an essential part of the country's economic recovery,” Andrew Dale, senior vice-president of operations and financial products at Float, said in the report.

“We are seeing signs of midmarket and larger businesses leading the way in investing for growth, and hope to see the microSMB sector follow suit, accelerating economic growth and ensuring a more sustainable and equitable future for all Canadians."

Methodology

Float processes credit card transaction data for thousands of Canadian SMBs. The report took a cross-section of 1,000 companies for the analysis.

POT ECONOMICS

Regulations won’t stop Canopy Growth from U.S. expansion, says CEO

Mitchell Consky, BNN Bloomberg

After shareholders of Canadian cannabis company Canopy Growth Corp. voted in favour of a new exchangeable share structure, David Klein, chief executive officer of Canopy Growth, says doors are opening for what he calls a $50-billion sector. 

“Our share prices are up 65 per cent or so in the last three months, so, for me, we’re looking at this over the long term,” he told BNN Bloomberg in an interview on Monday. “I think the market is already recognizing the progress we’ve made.”

The new structure will enable Canopy’s larger entry into the American cannabis market under U.S.-domiciled holding company Canopy USA, a move that required regulatory adjustments in a cannabis system that previously prevented Canadian companies listed in the U.S. from operating on American soil. 

“The U.S. market is the biggest market in the world as it relates to cannabis, and it also has the best profit goals, so it was really important for us to have a business in the U.S.,” Klein told BNN Bloomberg, pointing to several investments Canopy has made in U.S. companies, including Wana Brands, Jetty Extracts and Acreage Holdings. 

“The point of the vote was really to allow us to merge those businesses together so they could operate as one,” Klein explained. 

“We were able to work through a structure with the regulators as long as we allow Canopy USA to operate as an independent company that allows our investors to have exposure to the U.S. market.”

Klein added that the Canopy USA infrastructure itself will be “a separate company that sits underneath the Canopy umbrella from an economic perspective.”

He also mentioned that the company is scouting for “constellation brands,” to move from Class A common stocks to exchangeable shares.

“What we bring to the table is exposure globally. We bring market access where we’re a top player in Germany,” he said. “We’ve shown a ton of growth in a market like Australia. And we’ve improved margins in Canada dramatically. And my view is that if you could be successful in Canada you could be successful in the U.S. markets.”

In a previous interview with BNN Bloomberg, Klein mentioned that Canopy has undergone a “significant transformation,” narrowing its EBITDA loss, with additional cost cuts of $54 million. He also pointed to three consecutive quarters of revenue gain in the Canadian market. 

Despite regulatory speed bumps, Klein said the cannabis sector remains full of hope.

“We fully expect that the U.S. legal market will hit US$50 billion,” he said. 

“It is taking longer for the regulatory regime to keep up with all of the market projections. But the cool thing for us about the Canopy USA structure is we don’t really require any further federal regulatory improvements in order for us to take advantage of that.”

To watch the rest of Klein’s interview with BNN Bloomberg, watch the video 

Walmart launches pilot program for customers to recycle reusable shopping bags

BNN Bloomberg

Walmart Canada is launching a national pilot program for customers to recycle their reusable shopping bags. 

Under the plan, customers will be able send in their extra or damaged Walmart reusable blue shopping bags to TerraCycle who will either wash and donate them to charity partners, including Food Banks Canada, or recycle them.

Recycled bags will be processed into raw materials that can be used to make things like shipping pallets and outdoor furniture, Walmart said. 

"This first-of-its-kind national recycling pilot program will allow Canadians to give their excess or damaged reusable blue bags a second life, free of charge, preventing them from taking up space at home or heading to landfill," Walmart Canada senior manager of sustainability Jennifer Barbazza said in the release. 

Customers looking to participate can sign up for the program on TerraCycle's website. 

According to TerraCycle, bags can be sent in a box or shipping envelope — you need a minimum of five bags for a shipment — and the program provides a free shipping label. 

The web page for the program notes that enrolment limits apply, and if the program is full, customers will be added to a wait-list. 

Canada banned single-use plastic shopping bags in December 2022, along with other single-use plastic items including straws and cutlery.

However, Walmart Canada stopped offering plastic bags in April that year, saying the change would help prevent more than 680 million plastic bags from entering circulation every year. 

This report by The Canadian Press was first published April 15, 2024. 

 

First 2024 Canada carbon rebates will be deposited today for some Canadians

The first instalment of the 2024 Canada carbon rebate will be delivered to some Canadians today as long as they filed their taxes by the middle of March.

Canadians living in Alberta, Saskatchewan, Manitoba, Ontario, and all four Atlantic provinces will receive the first of four instalments today if they filed their 2023 taxes by March 15.

Those who filed their taxes since March 15 will see their first instalment on May 15, while those who file after today will wait until June or July.

The payments are based on household size and for a family of four range from $190 in New Brunswick to $450 in Alberta.

Ottawa also has just launched a new online estimator that shows how much you should get from the rebates.

In a bid to make the rebates more understandable Ottawa renamed them the "Canada Carbon Rebate" this year but is still negotiating with the big banks about changing how the deposits are labelled when they show up in your account.

Ottawa has been battling with banks about how the deposits are labelled since they moved to quarterly payments for the rebates in 2022.

Many Canadians were confused, or didn't realize they even got the rebate, when payments showed up with vague labels including "EFT deposit from Canada", "EFT Credit Canada." or sometimes just "federal payment."

The federal government asked the banks to help label them with the old moniker — the climate action incentive payment — but some didn't arguing they had a 15 character limit for deposit description.

The deposits will be labelled different depending on where you bank, with some going with the full Canada Carbon Rebate name, others shortening it "CDACarbonRebate" or "Canada CCR/RCC." 

In French, the labels could be "Carbone RemiseCA" or "Dépôt direct/Remise canadienne sur carbone."

The rebates are sent to offset what people pay in carbon pricing when they buy fuel so they're not less worse off as a result.

People who do things to lower their fuel use are even better off because they still get the same rebate but pay less in carbon pricing.

The rebate amounts are set annually based on how much carbon price Ottawa expects to collect in each province.

British Columbia, Quebec and Northwest Territories have their own carbon pricing system for consumers so residents there don't receive the federal payment. Yukon and Nunavut use the federal system but have an agreement to distribute the proceeds themselves.

The parliamentary budget officer says about 80 per cent of Canadians get back more from the rebates than they pay. 

He also says though that the economic impact of carbon pricing could lower wages over time, erasing that benefit for some Canadians. The government however argues that climate change itself can cause economic harm if it is left unchecked.

This report by The Canadian Press was first published April 15, 2024.

 

Conflict heating up between Parkland Corp. and top shareholder Simpson Oil

Amanda Stephenson, The Canadian Press

The internal strife at fuel retailer Parkland Corp. continues as the Calgary-based company rejected a call by its largest shareholder to consider a potential sale of the business. 

It's the latest development in Parkland's months-long dispute with Simpson Oil, which owns about 20 per cent of Parkland shares but no longer has a seat on the fuel retailer's board after the resignation of two Simpson-nominated directors in December.

Simpson did not provide a reason for the resignations at the time, but last week sent a letter to Parkland's board calling on it to immediately "commence a review of strategic alternatives, including a potential transition of the company to new ownership."

In a news release, Simpson — which is based in the Cayman Islands — said such a review is "essential to optimize Parkland's operational and financial performance."

"As a supportive partner, we have consistently encouraged the company to maximize value and returns to shareholders. The results have fallen short of our expectations," Simpson Oil stated.

Parkland shot back late Sunday night, saying the current call for a strategic review is an attempt by Simpson "to circumvent established corporate governance without considering the interests of all shareholders."

Parkland added that Simpson's move violates the terms of a 2019 governance agreement in which Simpson agreed to a range of provisions to ensure it would not be able to exercise undue influence and control over Parkland in pursuing its own interests.

"Parkland will enforce the terms of the governance agreement while remaining willing to engage with Simpson," Parkland stated.

Simpson Oil is the previous owner of Caribbean fuel retailer Sol, which has since been acquired by Parkland. Simpson has been a Parkland shareholder since 2017.

Simpson's call for a strategic review of Parkland marks the second time in just over a year that a shareholder has gone public with concerns about the company's direction. 

Last March, U.S.-based activist investor Engine Capital LP publicly urged Parkland to get rid of what it called "non-core assets'' and become a pure-play fuel and convenience retailer.

While Parkland rejected Engine's suggestion that it sell or spin off its Burnaby, B.C. refinery, the company did make other changes including putting a number of other assets, such as certain retail locations, up for sale and making changes to its board of directors.

In a research note Sunday, CIBC Capital Markets analyst Kevin Chiang said Simpson Oil's public call for a strategic review suggests the discussions between Parkland and its largest shareholder have reached an "impasse."

He added he agrees with Simpson's assessment that Parkland has underperformed the broader market over the last few years, and said that Simpson taking a more activist approach could be a good thing.

"While we will need to see how (Simpson and Parkland) work through their issues, we view this recent development as a positive for (Parkland's) share price," Chiang wrote.

Parkland's share price has been on a downward slide since February, but as of midday Monday was up more than five per cent to $42.99.

"In our view, the tension between Parkland and its largest shareholder has created an overhang given elevated uncertainty, which we believe has been the key driver of recent underperformance," said Luke Davis of RBC Capital Markets in a note.

This report by The Canadian Press was first published April 15, 2024.

SWEATSHOP ECONOMICS

Gildan Activewear Inc.’s new CEO Vince Tyra gave an update to investors

 Three months into his time leading the company as shareholder infighting over his hiring continues.

Tyra outlined his strategic priorities for the company, with a focus on driving growth at the Montreal-based clothing manufacturer.

His priorities include strengthening Gildan's market position and brand awareness, and growing the company's market share internationally.

"I believe we are starting a new and exciting era at Gildan," said Tyra.

Gildan has been embroiled in controversy ever since it announced that long-time CEO and co-founder Glenn Chamandy was being replaced by Tyra. The company has said Chamandy had no credible long-term strategy and had lost the board’s confidence.

But several of the company’s investors have criticized the company for the move and are calling for Chamandy’s return.

Those investors include the company’s largest shareholder, Jarislowsky Fraser, which as of the end of 2023 owned 7.05 per cent of Gildan shares.

Other investors calling for change at Gildan include Browning West, which as of April 1 had 5.12 per cent; and Turtle Creek Asset Management, which had 2.56 per cent at the end of 2023.

Earlier in April, Browning West released a plan to cut costs at Gildan and grow its market share. The plan would include shifting production of fashion basics products from Honduras to Bangladesh and using excess capacity in Honduras for fleece production.

Gildan said last month that it has formed a special committee of independent directors to consider a "non-binding expression of interest" from an unnamed potential purchaser and contact other potential bidders.

But Browning West and Turtle Creek have said the current board cannot be trusted to oversee a sale of the company.

In previous statements, Chamandy has defended his leadership at Gildan, and has said he presented a comprehensive long-range plan in October that showed meaningful growth prospects for Gildan over the next five years.

The company said it plans to hold an investor day in the fall to provide a comprehensive strategic plan.

The clothing manufacturer saw profits rise in its fourth quarter to US$153.3 million, up from US$83.9 million a year earlier.

Gildan reconfirmed its 2024 guidance in Monday's press release, with revenue growth expected to be flat to the low single-digits.

Tyra said Gildan is on track with the first phase of its expansion in Bangladesh, a project that he said will enable the company to reduce costs, among other benefits.

One of his priorities is to successfully execute supply chain initiatives launched before his time as CEO.

"That includes delivering on Bangladesh, optimizing production in the Western Hemisphere and continuing to innovate our processes. These projects cannot be taken for granted," he said.

While the U.S. continues to be Gildan's most significant market, Tyra said the company is not capturing its "fair share" in Europe. Over the past years, sales from outside the U.S. and Canada have made up between seven and 10 per cent of the company's total revenue, he said.

"International markets were pursued opportunistically, often prioritizing available product to the U.S. and shorting international deliveries," he said.

Going forward, Tyra said he sees an opportunity to "double down" on certain regions.

As part of that, he said it's important that Gildan considers local needs and tastes as it looks to grow its market share outside the U.S., prioritizing "surgical product introductions" over a "one-size-fits-all approach."

This report by The Canadian Press was first published April 15, 2024.

 

Defunct Lynx Air blames contractor for delayed passenger refunds

Christopher Reynolds, The Canadian Press

A contractor bears the blame for delayed refunds to Lynx Air customers, the insolvent airline says, adding that the hold-up will also hurt company stakeholders.

Lynx, which ceased operations and filed for creditor protection in late February, claimed in court filings that the firm hired to handle bookings, Texas-based Sabre Corp., has hampered passenger reimbursements.

The ultra-low-cost carrier said it had planned to carry out refunds directly, "without the need for customers to contact their credit card providers to submit chargebacks."

"Unfortunately, Sabre Corp. ... has refused to assist with customer refunds," according to an affidavit from Lynx's interim chief financial officer and filed with the Alberta Court of King's Bench.

That leaves the airline no choice but to work with its credit card processor to deal with chargebacks for would-be travellers whose flights were cancelled, the filings state.

While customers wait to have their purchases reimbursed, the company's investors may also have a harder time recouping their own cash from Lynx.

"The chargeback process is expensive, and this will therefore result in significant chargeback fees to the applicants" — Lynx — "to the detriment of their stakeholders," the carrier stated.

Sabre Corp., a travel technology company with clients in more than 160 countries, did not immediately respond to a request for comment.

The deadline for customers to submit chargeback requests is Sept. 1, 2025, court documents say.

The shutdown of Calgary-based Lynx comes as the budget airlines that have cropped up in recent years face ongoing financial pressures — if they've survived at all. The tough market stems partly from industry consolidation and fallout from the travel sector implosion during the COVID-19 pandemic.

In October, WestJet closed its discount Swoop subsidiary. It also plans to wind down Sunwing Airlines and integrate the low-cost carrier into its mainline business by this coming October after buying the Toronto-based company last May.

Ultra-low-cost Flair Airlines has also confronted financial turbulence over the past year. As of November, it owed the federal government $67.2 million in unpaid taxes related to import duties on the 20 Boeing jets that make up its fleet.

In court filings earlier this year, Lynx said it owed $124.3-million to a division of Indigo Partners, the U.S. private equity firm run by Bill Franke that owns one-quarter of the carrier.

Fresh filings show Lynx has asked a judge to allow repayment of up to $94 million of that debt. Seeking to assuage concerns from other investors hoping to recoup their money, Lynx said the move would be "to the benefit of all stakeholders generally" due to the lower interest that would accrue.

When it filed for creditor protection on Feb. 22, Lynx also owed $25.6 million in unpaid taxes to the federal government and $47.8 million to various trade creditors, according to court documents.

Lynx owes a further $4.1 million to the Toronto and Montreal airports and $4.5 million to Delta Air Lines for aircraft maintenance and warehousing.

The company's initial investors included Indigo, Stephen Bronfman’s Claridge Inc. and Torquest Partners.

Based in Arizona, Indigo is known for launching no-frills carriers such as Wizz Air in Hungary, Frontier Airlines in the U.S., JetSmart in Chile and Volaris in Mexico.

Lynx, which stopped flying barely 22 months after it first took off, has cited several reasons for its downfall.

The 21-month global grounding of the Boeing 737 Max 8 — Lynx's nine-plane fleet was composed exclusively of those jets — along with COVID-19 travel restrictions and jet fuel price hikes delayed the airline's inaugural flight by more than two years to April 2022 and hampered ticket sales to the point it could no longer pay its creditors, the ultra-low-cost carrier said in a brief to the court earlier this year.

"Unlike legacy airlines or a low-cost-carrier who can recoup lost revenue by increasing base fairs, a ULCC cannot deviate from the established base fare without abandoning the ULCC model altogether," the filing states.

This report by The Canadian Press was first published April 15, 2024.

 

Alberta's population growth is breaking records, but signs of strain are showing

Amanda Stephenson, The Canadian Press

At Calgary's Centre for Newcomers, where Kelly Ernst is chief program officer, staff have been — in Ernst's words — "run off their feet."

The non-profit organization, which offers services and language training to immigrants and refugees in Alberta's largest city, served an eye-popping 50,000 clients last year. It was a dramatic increase from the prior year, and also a huge uptick from pre-pandemic times.

"These numbers are more than 100 per cent greater than the previous year, and triple five years ago," Ernst said.

"For some services, the numbers are up over 400 per cent over two years."

The surge in demand for newcomer services in Calgary is a reflection of Alberta's record-breaking population growth, which has come with both pros and cons. 

In 2023, the western province saw its population surge by 202,324 residents to 4.8 million, according to Statistics Canada.

That's the largest annual increase in Alberta's history, the equivalent of 550 people moving to the province every day. While the bulk of the growth came from international migration, reflecting a Canada-wide trend, Alberta also shattered a national record in 2023 for interprovincial migration with a net gain of 55,107 people, the highest ever recorded by any province.

Most of these interprovincial migrants came from Ontario and British Columbia. Statistics Canada estimates that 38,236 Ontarians moved to Alberta last year, for example, versus just 14,860 Albertans who moved to Ontario.

Alberta has always been a place with periods of sudden, dramatic population growth. The province's oil and gas-based economy has attracted waves of job-seekers during historical times of high commodity prices and busy oilpatch activity.

But what is happening right now in Alberta is different than in the past, said Mark Parsons, chief economist for ATB Financial.

“Alberta's is a relatively strong economy, so the fast rate of job growth is contributing to the influx of people coming into the province, no question," Parsons said. 

"What’s different this time is that affordability is playing an important role — particularly housing affordability.”

Experts say Canada's housing crisis, and the affordability of the Alberta real estate market compared with places like Toronto and Vancouver, is one of the reasons the province has been the destination for so many U-Hauls and moving trucks.

In fact, housing affordability was one of the carrots the Alberta government dangled with its "Alberta is Calling" ad campaign, which ran in the spring of 2023 in southern Ontario and Atlantic Canada. The campaign urged Canadians who can't afford a home where they live to consider moving to Alberta, with its comparatively high salaries and lower real estate prices.

While the campaign was a smashing success from a marketing perspective, Alberta's population boom has downsides. The sharp uptick in residents has helped drive economic growth, supporting retail and restaurant sales in the province and leading to a flurry of construction activity, but it has also made Alberta's famously affordable real estate less affordable.

"In 2022, it felt like everyone was saying, 'Alberta's on sale, this is great, this is amazing,'" said Calgary real estate agent Dawn Herron Maser. 

"But now people who are from here are starting to feel like, 'Is it really that much on sale anymore? Because we're here in Alberta and we're struggling. We're struggling to buy our homes here.'"

In Calgary, the benchmark home price in March was $597,600, nearly 11 per cent higher than the previous year, according to the Calgary Real Estate Board. Anecdotes abound of wild bidding wars between buyers willing to waive all conditions and offer tens of thousands more than the asking price, a phenomenon that has become prevalent in hot markets like Toronto and Vancouver.

Calgary and Edmonton also saw the sharpest acceleration in rent prices among major Canadian cities in 2023. In Calgary specifically, the average rent for a two-bedroom apartment in 2023 jumped 14.3 per cent, the highest year-over-year growth in the country and the sharpest single-year rise in rent growth the city has seen since 2007, data from CMHC shows. 

Adam Legge, president of the Business Council of Alberta, said new homes are simply not being built fast enough to keep up with the province's growth. And there are other signs of strain showing as well. New arrivals to Alberta are struggling to find family doctors, and unprecedented school enrolment growth has led to overcrowded classrooms.

There is also a shortage of construction workers, welders and all of the other skilled tradespeople needed to build everything from houses to schools to roads as quickly as possible.

"We just aren't seeing a sufficient inflow of new Albertans, either interprovincially or internationally coming with those kinds of skills and credentials," Legge said.

While the pace of population growth in Alberta is expected to moderate this year and in 2025, ATB Financial predicts it will still be strong compared to most other parts of Canada and developed economies around the world.

In the long term, sustained growth is likely. The province's economy is diversifying, creating opportunities for workers in non-oil and gas-related fields such as technology and aviation, and the proximity of the Rocky Mountains and some of Canada's best-loved national parks continue to be a draw for tourists.

The Alberta government's own projections call for the province's population to hit six million people as early as 2039.

"We really need to start looking at Alberta, and the West in general, in a different way," said Ernst, with the Centre for Newcomers, adding both provincial and federal governments need to prepare for the growth that is coming by investing in housing, infrastructure, programs and education.

"We’ve got to really think critically about the allocation of resources in this country — really understanding where people are moving, where people are setting up, where some of the population pressures are.”

Legge agreed, adding it's vital Alberta prepare for its future by addressing areas that are already under strain due to the province's rapid growth.

"The message 'Alberta is Calling' is clearly working, which is a great thing in the sense of growth for the province and the people who are bringing their skills and talents and passions and entrepreneurship here," he said.

"We've just got to make sure that we don't become victims of our own success, and tackle some of the challenges that are already putting strain on our quality of life."

This report by The Canadian Press was first published April 14, 2024.

 

Iran’s Response To Israel’s Strike Was Pure Political Theater

By Gregory R. Copley - Apr 15, 2024

Iran’s attack on Israel on the night of April 13-14, 2024, showed how well the two countries understand each other and recognize that they are not each other’s main threats. They do have a lingering conflict, but misleading Western media rhetoric that Shi’ite Iran is the primary sponsor of the Sunni/Muslim Brotherhood Hamas movement obscures realities.

1. Primary sponsors of Hamas, which began the war against Israel on October 7, 2023, are Turkey and Qatar, both Muslim Brotherhood states extremely hostile to Israel. Each has a delicate relationship with Iran, and they would have been happy to have Tehran bear the brunt of Israel’s anger. Having said that, Iran had no option but to respond to the Israeli bombing on April 1, 2024, of the Iranian consulate in Damascus, killing senior Pasdaran (IRGC) officers.

2. Iran’s response was pure political theater: Tehran leaked to the US and Israel the nature, targeting, and timing of the proposed Iranian attack on Israel, clearly indicating that it proposed a symbolic attack designed to avoid human casualties. Iranian Supreme Leader Ayatollah Khamenei announced when the first salvos of several hundred unmanned combat aerial vehicles (UCAVs or loitering munitions), cruise missiles, and light ballistic missiles were fired, giving Israeli anti-missile forces (mainly Iron Dome and David’s Sling systems) and Allied (US, UK, and Jordanian) systems time to prepare. Some 300 Iranian systems (170 UCAVs and 120+ ballistic missiles) were fired, 99 percent were intercepted, and no deaths were recorded by Israel. As well, some 350 rockets were fired from Iran, Iraq, Yemen, and by HizbAllah (in Lebanon). No Turkish, Qatari, or Hamas assets were used in the attacks.

3. Iran very pointedly did not use its heavier ballistic missiles, such as the 2,000km range Sajjil or Sajjil-2 MRBMs (almost certainly nuclear capable) in the strike. This would not only have been threatening in terms of imagery (because of its nuclear capability), but would have brought up the Israeli Arrow 3 ABM systems. For Iran to have its Sajjils defeated (even if they were carrying only a conventional payload) would have subjected Tehran to reduced prestige and credibility. As it is now, the Iranian retaliation signaled “honor is satisfied”, even to its regional audience. Significantly, as a result, Israel has deferred a response.

4. Russia almost certainly worked with the Iranian leadership to ensure that Tehran was not drawn in by Israel to a broader response. Moscow has only now succeeded in bringing Iran into its International North-South Transport Corridor (INSTC) which creates a riverine, rail, and oceanic transport link from the Baltic/Atlantic to the Indian Ocean and India via Iran. It cannot afford to have an Israeli war against Iran jeopardize this. Russia is clearly unhappy about Turkey’s réle in attempting to disrupt the INSTC in order to promote its own proposed link through the Persian Gulf to Iraq to Turkey and on to Europe.

5. There is some suggestion that Russian links may have been used to pass Iranian information to Israel and the US. Russia is also anxious not to re-ignite US or Israeli hostilities toward Syria, where Russia enjoys significant military basing.

6. Turkey on April 9, 2024, announced a trade war against Israel, in violation of specific bilateral agreements, to pressure it on the Gaza war, and also announced that another “Gaza flotilla” of multiple vessels would attempt in mid-April 2024 to breach the Israeli containment of Gaza, as was attempted in 2010 by six ships of the Mavi Marmara flotilla. The provocation, symbolic rather than substantive, comes as Turkish Pres. Recep Tayyip Erdogan attempts to recover from his worst electoral setback, showing widespread rejection of his policies at home.

By Gregory R. Copley via Defense and Foreign Affairs Special Analysis