Canadian Stocks Decline as BCE’s Profit Lags Behind Estimates

Canadian stocks fell after BCE Inc. (BCE)’s failure to match analysts’ earnings estimates and a drop in wheat futures outweighed an agreement among Greek leaders on austerity measures.

BCE, Canada’s largest phone company, dropped 3 percent. Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer producer by market value, slipped 1.1 percent as wheat futures retreated the most in four weeks after the U.S. forecast a record world supply of the grain. Canadian Tire Corp., the country’s largest general-goods retailer, rallied 4.2 percent after beating the average analyst profit estimate in a Bloomberg survey.

The S&P/TSX Composite Index (SPTSX) slipped 23.08 points, or 0.2 percent, to 12,497.94.

“With Greece, I think they forced an agreement so there could be a nice press conference, but nothing is really settled,” Stephen Gauthier, a money manager at Fin-XO Securities in Montreal, said in a telephone interview. The firm oversees about C$600 million ($600 million). “If it had been that Germany is guaranteeing everything, that would have pleased the market.”

The index gained 4.7 percent this year through yesterday as U.S. unemployment dropped to a three-year low, overshadowing the European debt crisis. Seventy-five percent of Canada’s exports went to the U.S. in 2010, according to Statistics Canada.

Missed Estimates

BCE fell 3 percent, the most since December 2009, to C$39.62 after its fourth-quarter profit missed the average analyst estimate by 5.5 percent, excluding certain items. The company hadn’t trailed analysts’ earnings forecasts by so much since the second quarter of 2008, according to Bloomberg data.

Potash Corp. dropped 1.1 percent to C$45.79. Wheat inventories on May 31 will be 6.2 percent higher than a year earlier, the U.S. Agriculture Department said today. Most analysts in a Bloomberg survey had forecast a decrease.

The S&P/TSX Energy Index (STENRS) retreated for a fourth day after Suncor Energy Inc. (SU) shut down an operating unit at an oil-sands refinery in Edmonton, Alberta. The discount for oil from the Syncrude oil-sands project to West Texas Intermediate crude climbed to a record this week.

Canadian Oil Sands Ltd., which, like Suncor, owns part of the Syncrude project, fell 4.2 percent to C$22.61, a fifth straight drop. Penn West Petroleum Ltd., a western Canadian oil and gas producer, lost 2.1 percent to C$21.48. Suncor slipped 0.3 percent to C$34.59.

Executive Departure

Manulife Financial Inc., North America’s fourth-largest insurer, slumped 1.9 percent to C$11.88 after saying its chief financial officer, Michael Bell, will leave the company to return to Philadelphia, where he lived before joining Manulife in 2009. “This is far from a positive as Michael had shown a very firm grasp on the company’s operations and, in our view, will be difficult to replace,” John Aiken, an analyst at Barclays Plc, wrote in a note to clients.

Canadian Tire rose 4.2 percent to C$66.15 after reporting fourth-quarter profit that surpassed the average analyst estimate in a Bloomberg survey by 10 percent, excluding certain items. Irene Nattel, an analyst at Royal Bank of Canada, raised her 12-month price estimate on the shares to C$85 from C$76.

Gildan Activewear Inc. (GIL), Canada’s largest clothing maker, jumped 7.7 percent, the most since December 2009, to C$23.86. The company reported a smaller first-quarter loss than it had forecast in December.

Canadian Pacific Railway Ltd. fell for the first time in seven days after closing at the highest price relative to earnings since at least 2002 yesterday. CP dropped 1.7 percent to C$75.25. The shares soared 66 percent from Sept. 22 to yesterday as William Ackman’s Pershing Square Capital Management LP bought a stake in the company and began a campaign to oust Chief Executive Officer Fred Green.

Lake Shore Gold Corp. (LSG), which mines in Ontario, rallied 12 percent to C$1.55 after saying Franco-Nevada Corp. agreed to invest in and buy a royalty from the company.

To contact the reporter on this story: Matt Walcoff in Toronto at mwalcoff1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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