Canadian Stocks Slide as Encana, Cenovus Fall on EarningsEric Lam
Canadian stocks fell for a second day as Encana Corp. and Cenovus Energy Inc. tumbled after reporting results.
Encana slumped 6.6 percent after cutting its planned spending for 2013 as it seeks to boost output of oil and natural gas liquids. Cenovus Energy Inc. dropped 2.5 percent as it swung to a loss after taking a charge on its Suffield assets in southeast Alberta. Barrick Gold Corp., the world’s largest gold producer, climbed 2.3 percent after saying it’s open to anything that boosts shareholder value. Kinross Gold Corp. jumped 5.4 percent after adjusted earnings beat estimates.
The Standard & Poor’s/TSX Composite Index fell 53.49 points, or 0.4 percent, to 12,721.79 in Toronto. The S&P/TSX has risen 3 percent over the past 12 months, underperforming every developed market in the world except Italy and Spain, according to data compiled by Bloomberg.
“It’s a bit of a drifting market, there’s some general exhaustion and we’re looking for the next catalyst,” said Bob Decker, fund manager with Aurion Capital Management, who helps manage about C$6 billion ($6 billion). “The golds have a bit of a bounce in them after the earnings reports. Management is clearing the decks of some of their past mistakes. Encana is suffering from weaker natural gas and their guidance for liquids production was disappointing.”
Energy stocks contributed most to losses in the S&P/TSX as seven of 10 industries retreated. Trading volume was 5.8 percent above the 30-day average at this time of the day.
Encana tumbled C$1.28 to C$18.20. The company is cutting its planned spending for 2013 to $3 billion to $3.2 billion, from a June forecast of $4 billion to $5 billion. A glut in North American supply because of shale-gas drilling has reduced profits for producers of the heating- and power-plant fuel, which fell to a 10-year low in April.
Canada’s largest natural gas producer also reported a narrower net loss in the fourth fourth-quarter, to $80 million, or 11 cents a share, from $476 million, or 65 cents, a year earlier.
Cenovus dropped 81 Canadian cents to C$31.79. The oil producer planning to triple production within a decade recorded a C$393 million impairment related to its Suffield assets, mainly due to estimated declines in future natural gas prices.
Sun Life Financial Inc., a Canadian insurer, dropped 3.8 percent to C$28.86. The company reported fourth-quarter adjusted profit of 76 cents a share, beating the 63-cent average estimate of 13 analysts surveyed by Bloomberg. Michael Goldberg, analyst with Desjardins Securities Inc., said core earnings, which ignores discontinued U.S. annuity and variable insurance operations, came in at 46 cents a share, below expectations.
“Its continuing core earnings were much lower than expected,” Goldberg said in a note. “The lower continuing core earnings are likely to leave investors uncertain about what level is sustainable.”
BlackBerry, which unveiled its new line of smartphones on Jan. 30, climbed 7.8 percent to C$15.05 for the largest advance in the S&P/TSX, erasing earlier losses of as much as 7.2 percent.
Jim Balsillie, who served until January last year as co-chief executive officer of the company formerly known as Research in Motion Ltd., cut his 5.1 percent ownership stake. Balsillie reported owning zero shares in RIM as of Dec. 31 in a U.S. regulatory filing dated today. Investors who hold an equity stake in a company of less than 5 percent aren’t required to disclose when they buy or sell the shares.
Kinross climbed 43 Canadian cents to C$8.34. The third-largest producer of gold in Canada took a $3.09 billion writedown on its Tasiast mine in Mauritania after revising an expansion plan. Earnings excluding the writedown and other items were 24 cents a share, beating the 21-cent average of 21 analysts’ estimates compiled by Bloomberg.
Barrick advanced 72 Canadian cents to C$32.44. The world’s largest producer of gold said it’s open to anything that boosts shareholder value and it has been approached by many buyers interested in its assets.
“We continue to actively pursue opportunities to optimize our existing portfolio,” Barrick Chief Executive Officer Jamie Sokalsky said today on a conference call.
The company also posted an unexpected fourth-quarter loss after taking a $3 billion writedown on a Zambian copper mine it bought in 2011.