Canada will feel oilpatch pain, but not as badly as 2015: Poloz

Canada will feel oilpatch pain, but not as badly as 2015: Poloz

The negative impacts of low oil prices that have struck Western Canada will reverberate across the entire national economy, the head of the Bank of Canada said Thursday.

But governor Stephen Poloz estimates the latest drop in crude prices will likely have less bite across the country than the 2015 oil-price crisis, which contributed at the time to a slight, technical recession.

In prepared notes for a speech in Toronto, Poloz said oil and gas production now makes up just 3.5 per cent of Canada’s economy, compared with six per cent in 2014.

“It is already clear that a painful adjustment is developing for Western Canada, and there will be a meaningful impact on the Canadian macroeconomy,” Poloz said in an address to be delivered at a breakfast event hosted by CFA Toronto.

“That said, given the consolidation that has taken place in the energy sector since 2014, the net effects of lower oil prices on the Canadian economy as a whole, dollar for dollar, should be smaller than they were in 2015.”

Speaking to reporters after the speech, Poloz said the adjustment from that oil price drop was “speeded up by the fact that we cut rates twice in 2015.”

Economy otherwise doing well

Looking at the positive side, Poloz said the ongoing “oil-price shock” has also arrived at a time when Canada’s economy is running close to full tilt and the unemployment rate is at a 40-year low.

The stronger economy has put the central bank on a rate-hiking path — to keep inflation from running too hot — for more than a year. It raised its trend-setting interest rate at its October meeting for the fifth time since the summer of 2017.

But on Wednesday, the bank left the rate unchanged as it underlined fresh negatives, such as the recent drop in oil prices and an unexpected decline in business investment.

Market watchers, many of whom had expected the bank to increase the rate in January, now believe the recent economic developments will delay the timing of future rate hikes.

“In terms of the Canadian economy, it is fair to say that the data released since our October [monetary policy report] have been on the disappointing side,” said Poloz.

Poloz added that he remains hopeful that business investment will rebound now that much of the uncertainty surrounding the North American free trade has been eased following the signing of a new agreement between the United States, Mexico and Canada.



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Huawei is ‘growing astronomically’ despite allegations it spies for China

Huawei is 'growing astronomically' despite allegations it spies for China

The arrest of Huawei’s chief financial officer is just the latest controversy to hit the tech giant which has been accused of conducting espionage activities for the Chinese government. 

“We don’t know to what extent they might be considered an arms length business and to what extent they might be simply an arm of the Chinese government,” said David Skillicorn, a professor in Queen’s University School of Computing.

Huawei Technologies Co. Ltd. has been thrust into the spotlight with the arrest of ​Meng Wanzhou, its chief financial officer and deputy chair of the board. According to a statement from the U.S. Department of Justice, Meng was arrested in Vancouver on Saturday and is being sought for extradition by the United States. 

The Globe and Mail reported Wednesday that Meng was arrested on suspicion of violating U.S. trade sanctions on Iran. She has a bail hearing in Canada on Friday.

Meng Wanzhou is Huawei’s deputy chairwoman and CFO. According to reports, she is wanted by the United States for allegedly contravening U.S. trade sanctions against Iran. (fensifuwu.com)

For years, Huawei has been a source of concern for western security officials, particularly the U.S., which has tried to convince other countries not to buy equipment from the China-based firm.

Huawei denies allegations that it conducts espionage on behalf of China and has said it’s a market-driven business simply looking to compete internationally. 

‘Significant network security risk’

Some Canadian security experts have warned Canada about doing business with Huawei, one of the world’s biggest telecommunications firms. Ward Elcock, a former CSIS director and deputy minister of national defence, told  As It Happens host Carol Off in March that he believes the company is “essentially under the control of the Chinese government.”

“It is hard for me to believe that a company such as Huawei would not do the bidding of the Chinese government and would not build traps, back doors into its technology on behalf of the Chinese government,” he said.

Earlier this year, Republican Sen. Marco Rubio and Democratic Sen. Mark Warner wrote to Prime Minister Justin Trudeau warning him that doing business with Huawei would open Canada up to huge security risks.

Some companies and governments have taken heed to those warnings. Last month, New Zealand blocked a mobile phone company from using Huawei equipment, saying it posed a “significant network security risk.” Huawei was banned in August from working on Australia’s fifth-generation (5G) network.

On Wednesday, British phone carrier BT said it was removing Huawei equipment from the core of its existing 3G and 4G mobile phone networks and would not use their equipment for its planned 5G mobile network.

Canada, so far, has resisted those concerns but the government has said it is conducting a national-security review to determine whether Canada should join other Five Eyes partners in banning Huawei from some projects, the Globe and Mail reported.  Five Eyes refers to an intelligence sharing arrangement between Canada, the U.S., U.K., Australia and New Zealand. 

Competitive edge

Huawei’s equipment is used in telecommunications infrastructure run by the country’s major cellphone carriers. The company has struck up partnerships with Canadian universities. BCE and Telus are partnering with Huawei to help roll out their 5G networks

The private Chinese company with 180,000 employees is the biggest global supplier of network gear used by phone and internet companies, with over $90 billion US in revenue and $7 billion US in net profits, according to its 2017 annual report.

Just in the last quarter, it became the number two supplier of smartphones globally, said Dave Bolan, a senior telecom analyst at California-based Dell’Oro Group, Inc.

British phone carrier BT said it was removing Huawei equipment from the core of its existing 3G and 4G mobile phone networks and would not use their equipment for its planned 5G mobile network. (Luis Gene/AFP/Getty Images)

The company has said it sells its equipment through 46 of the world’s top 50 carriers. According to its website, its products are used in more than 170 countries and regions, serving over one-third of the world’s population. They are especially strong in Latin America, the Middle East, Africa and parts of Europe.

“They’ve been growing astronomically,” Bolan said. “Ten years ago, 15 years ago, we [had] never heard of Huawei.”

Huawei has been proactive in terms of pricing, Skillicorn said, making it difficult for companies and governments to “walk past the deal.”

“They are undercutting the competitors to some extent and making it very hard for governments to explain to voters why they’re not taking what looks like this fabulous deal,” he said. 

One of the security concerns, said Skillicorn, is that the company is a huge maker of network switches. ​

“When you use the network switch it sees absolutely everything that’s happening in your organization. And so you need to be especially careful about who makes those network switches,” he said.

Ties to People’s Liberation Army

Part of the distrust of Huawei stems from perceived ties between the company’s top executives and the Chinese government, said James Lewis, cybersecurity and technology expert for the Washington-based Center for Strategic and International Studies.

Huawei’s president, Ren Zhengfei, is a former military engineer for China’sPeople’s Liberation Army. And Sun Yafang, a former chairwoman, used to work for the Ministry of State Security which has close links to China’s intelligence services, Lewis said.

Chinese President Xi Jinping (L) pauses as he is shown around the offices of Huawei Technologies Co Ltd by Ren Zhengfei, president of Huawei. Zhengfei has been accused of having ties to China’s communist party. (Matthew Lloyd/Reuters)

Huawei has denied all accusations that it’s used as a front for Chinese espionage.

Ken Hu, one of Huawei’s three chief executives, said in an interview at the beginning of the year with the Wall Street Journal that the company isn’t a security threat.

Its “global business is testament to the fact that Huawei is not a vehicle for any government or any agency of putting surveillance on another country,” he said.



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No OPEC agreement yet on oil production cuts to bolster falling price

No OPEC agreement yet on oil production cuts to bolster falling price

OPEC countries hoping to stop the fall in oil prices put off their decision Thursday on how much to reduce oil production until they negotiate with ally Russia on Friday on how much it will contribute to the cut.

Some saw it as a sign that the group of oil-producing nations may not have the political unity to rein in supply and is suffering under political pressure from U.S. President Donald Trump to not push prices up again. Others interpreted it as a tactic to get Russia to agree to big cuts as well.

The price of oil has fallen about 25 per cent because major producers — including the U.S. — are pumping oil at high rates. It fell further on Thursday after OPEC’s lack of action and amid broader concerns about global economic growth.

Saudi Arabia, the heavyweight within OPEC, said Thursday it was in favour of a cut of about a million barrels a day.

But upon leaving the meeting, Saudi oil minister Khalid Al-Falih said “we’re still deliberating.” He said the OPEC countries were still discussing the distribution of the cuts between them.

Iran, Saudi’s regional rival and fellow OPEC member, has resisted any notion of cutting its output as its crude exports are being pinched already by U.S. sanctions. It has wanted an exemption.

A negotiating strategy?

The OPEC countries will now discuss the matter with Russia, which is not part of OPEC but has been co-ordinating its output levels to support the market.

Al-Falih said a decision would take all day Friday.

“I’m not confident,” he added.

Some experts saw that as a tactical move by OPEC countries to not announce a production level as they prepare to ask Russia and several other smaller non-OPEC countries to also cut their output.

“If they would, then [Russia and others] could adjust their negotiation strategy,” said Jan Edelmann, analyst at HSH Nordbank.

Whatever the logic, the lack of clarity put another dent in the price of oil. The international benchmark, Brent, was down $2.20 US at $59.36 a barrel on a day when stock markets also fell sharply around the world.

The fall in the price of oil will be a help to many consumers as well as energy-hungry businesses, particularly at a time when global growth is slowing.

U.S. now exporting more oil than it uses

In addition, U.S. President Donald Trump has been putting pressure publicly on OPEC to not cut production. He tweeted Wednesday that “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!”

Last week, the United States exported more crude oil and fuel than it imported, for the first time on record, according to data released Thursday.

When adding in all imports and exports of crude and refined products, the U.S. exported a net 211,000 barrels per day for the week through Nov. 30 — the first time that has happened, according to U.S. Energy Department figures dating to 1973. That was on the back of a jump in crude exports to a weekly record of more than 3.2 million barrels per day.

The United States historically has been a heavy importer of crude oil in part due to a four-decade ban on crude exports that was lifted in late 2015 by then-president Barack Obama.

Khashoggi killing could influence negotiations

While Saudi Arabia has indicated it is willing to cut production, its decision may be complicated by Trump’s decision to not sanction the country over the killing of dissident journalist Jamal Khashoggi. U.S. Senators say, after a briefing with intelligence services, that they are convinced that Saudi Arabia’s de-facto ruler, Crown Prince Mohammed bin Salman, was involved in Khashoggi’s death.

Some experts say that gives the U.S. some leverage over the Saudis, though Al-Falih denied that on Thursday.

When asked if the Saudis had permission from Trump to cut production, Al-Falih replied: “I don’t need permission from any foreign governments.”

Experts say this week’s meetings of the Organization of the Petroleum Exporting Countries will influence the price of oil over the coming months. How strongly it does so could depend on Russia’s contribution.

Analysts estimate that if Russia is willing to step up its production cuts, OPEC and non-OPEC countries could trim production by a combined 1.3-1.4 million barrels a day. A cut of 1 million barrels would be the minimum to support the market, and anything less could see the price of oil fall another $10 a barrel, according to Neil Wilson, chief market analyst at Markets.com.

“The cartel has to go above and beyond the 1 million barrels cut, to at least 1.4 million to really steady the ship,” said Wilson. “The stakes are high now for OPEC.”

Conflict within OPEC

OPEC’s reliance on non-members like Russia highlights the cartel’s waning influence in oil markets, which it had dominated for decades. The OPEC-Russia alliance was made necessary in 2016 to compete with the United States’ vastly increased production of oil in recent years. By some estimates, the U.S. this year became the world’s top crude producer.

OPEC is also riven by internal conflict, particularly the rivalry between Saudi Arabia and Iran. Meanwhile, Qatar, a Saudi rival and Iranian ally, said this week it would leave OPEC in January.

While it said it was purely a practical decision because it mainly produces natural gas and little oil, the move was viewed as a symbolic snub to the Saudi-dominated organization.



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The NHL is making so much money

The NHL is making so much money

The Buzzer is the new email newsletter from CBC Sports. Subscribe here to get it delivered directly to your inbox every weekday.

OK, here’s what you need to know right now from the world of sports:

The NHL is making more money than ever

A lot more, according to Forbes. The business-focused media company did its annual audit of the league’s finances and found that the average team’s operating income (its profit, roughly) for the most recent season was $25 million US. That’s up from $18 million the year before — an increase of 39 per cent.

So how do they do it? The turning point, Forbes says, was the 2012-13 lockout. It wiped out half the season, but the owners persuaded the players to give them 50 per cent of hockey-related revenue (their cut had been 43 per cent). The average team immediately almost doubled its profit from the last full season and they haven’t looked back.

But last season was especially good to the owners for a few reasons. The biggest, Forbes says, was the expansion team in Las Vegas. The Golden Knights made it all the way to the Stanley Cup final and turned a profit of $53 million — fifth-highest in the league. Vegas’ ownership raised eyebrows when it paid a $500-million expansion fee, but the team is already worth $575 million, according to Forbes. Another big factor: Washington and Buffalo both doubled their local TV rights deals, to an average of $35 million and $25 million a year, respectively. The league could be looking for its own two-fold bump when its U.S. national TV deal expires in a few years. NBC currently pays an average of $187 million a year.

As a result, the average team’s value rose six per cent, to a record $630 million. The Rangers ($1.55 billion), Leafs ($1.45B) and Canadiens ($1.3B) are still the three most valuable teams. Winnipeg, despite an 11 per cent jump, is still the least-valuable Canadian franchise ($415M). But the Jets still rank ahead of four American teams — including Arizona ($290M), which is at the bottom. The Coyotes and Florida Panthers were the only franchises to lose value, according to Forbes.

And there’s more money — but also trouble — on the horizon. The NHL announced this week it’s expanding to Seattle for the 2021-22 season. Thanks to Vegas, the expansion fee (which owners don’t share with the players) went up to $650 million. The owners will soon get a chance to gobble an even bigger slice of the revenue pie as both they and the players have the option to end their collective bargaining agreement before the start of the 2020-21 season. Commissioner Gary Bettman always seems to come out ahead when negotiating a new CBA — by any means necessary. He’s presided over three lockouts, including one that wiped out an entire season. That ruthlessness bodes well for the owners’ bank accounts — but it’s not so great for the rest of us who just want to watch some NHL hockey.

More labour negotiations? Exxxxcellent. (Martti Kainulainen/Lehtikuva via Associated Press)

Quickly…

William Nylander will finally play for the Leafs tonight. The newly signed forward is expected to make his season debut when Toronto hosts Detroit. After a long standoff, Nylander and the Leafs agreed to a six-year deal worth about $42 million US just before Saturday’s deadline for him to be eligible to play this season (he thinks they had only seven minutes to spare). And it looks like there are no hard feelings from coach Mike Babcock — he’s putting Nylander on a line with superstar Auston Matthews and Patrick Marleau.

A big figure skating event starts tonight in Vancouver. The Grand Prix Final is the top international meet of the season outside of the world championships in March. And it’s more exclusive — only the top six in each competition are invited. The action begins with the men’s short skate at 10:45 p.m. ET (you can stream it live, with play-by-play from Canadian analyst Pj Kwong, on CBCSports.ca). Two-time Olympic champ Yuzuru Hanyu is sidelined with an injury, but his withdrawal opened up a spot for alternate Keegan Messing, who’s the only Canadian competing in any of the Final events. The women’s short skate goes at midnight ET. Olympic champ Alina Zagitova is the one to beat, but look out for Japan’s Rika Kihira. She’s only 16 but can already land a triple Axel in combination with another triple — a rarity among women. The pairs and dance competitions start tomorrow night. Pj wrote a preview if you want to go more in depth.

Edmonton and Red Deer, Alta., will host the 2021 world junior hockey tournament. That’s the one two years from now (the event always starts on Boxing Day and stretches into the new year, so they name them by the year in which they end). Canada has hosted the tournament every other year since 2015. This year’s is in Vancouver and Victoria, and it shifts to the Czech Republic next year. It’s no secret why organizers want it in Canada so often — the tournament is a big deal here… and pretty much nowhere else. Games in Canada can sell out NHL arenas and draw bigger, primetime TV audiences.

There was a pretty important baseball trade. Arizona sent Paul Goldschmidt, who’s one of the best first basemen in the game, to St. Louis for three youngsters/prospects. Over the last seven years, Canadian Joey Votto is the only National League hitter with a higher OPS (that’s one of the better stats for measuring a batter’s overall impact). Goldschmidt, who has also won three Gold Gloves for his defensive ability, has one year left on his contract before he becomes a free agent.

A dog-sledding champ was cleared of doping his dogs. Officials with the Iditarod, which is the world’s biggest dog-sled race, absolved four-time winner Dallas Seavey of any wrongdoing after four of his pooches tested positive for an opioid painkiller right after he finished second in March 2017. Neither the musher (that’s what they call the people who pilot the dog sleds) nor the Iditarod president would say exactly what they think happened, but the latter seemed to suggest that someone else drugged the dogs.


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Got an idea, question, comment or other feedback on the newsletter? A hot sports take you want to share? Drop us a line at thebuzzer@cbc.ca.



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Government staffer named in Mark Norman document leak case suspended from job

Government staffer named in Mark Norman document leak case suspended from job

A junior procurement official named in the criminal case against the military’s former second-in-command has been suspended from his federal government position, a House of Commons committee has been told.

Matthew Matchett was identified in court documents filed by the lawyers defending Vice-Admiral Mark Norman, who has been charged with a single count of breach of trust.

The revelation is the latest twist in the high-stakes prosecution of Norman, the former vice chief of the defence staff, who is accused by the RCMP of leaking cabinet secrets.

Les Linklater, an associate deputy minister at Public Services and Procurement Canada, told the Commons government operations committee late Thursday that Matchett has been suspended from his federal government job.

He said he was unable to state when it happened and refused to discuss the circumstances of Matchett’s suspension, including the reasons for it.

“I’m not at liberty to get into personnel management issues,” Linklater said when questioned by Conservative MP Kelly McCauley.

Les Linklater, a senior government official, disclosed the suspension of Mathew Matchett during a Commons committee on Thursday 0:54

Matchett has not been charged with any offence.

The Mounties acknowledged at the outset of their investigation into Norman that they were looking into more than one breach of secrecy linked to a cabinet committee meeting on shipbuilding early in the Liberal government’s mandate.

In asking the court last month to force the federal government to disclose documents, Norman’s lawyer Marie Henein claimed the federal police force had identified another source for the leak.

“The RCMP’s investigation discovered that a government employee, Matthew Matchett, gave a lobbyist then working for Davie the classified Memorandum to Cabinet (“MC”) and slide deck relating to the Liberal Government’s November 19, 2015 iAOR Cabinet committee meeting,” Henein wrote in an October court filing.

The Mounties refused to comment when asked about Matchett in October, saying that the investigation into the breaches of cabinet secrecy was ongoing.

In a subsequent court filing, Henein claimed that the Mounties had not yet interviewed Matchett.

Email exchanges released by the court this month suggest Matchett leaked a memorandum to cabinet and a slide presentation to an Ottawa lobbyist, Brian Mersereau, in the days leading up to the cabinet meeting in question.

At that meeting, the newly elected Liberal government chose to put a $668 million program to lease a supply ship for the navy on hold. Word of the decision immediately leaked to the media and cabinet eventually reversed course and allowed the project with the Davie Shipyard, in Levis, Que., to proceed.

Cabinet ministers were furious, however, and after an internal government investigation failed to determine the source, the RCMP were called in.

A detailed reference to Matchett was contained in over 700 pages of documents linked to Norman’s case and released by the court two weeks ago.

The documents include excerpts of emails and RCMP witness statements — records that have not been tested in court and may not be entered as evidence by the Crown.

In one email, Matchett allegedly tells Mersereau on Nov, 17, 2015, that he had “got everything — the motherload.”

Mersereau, of Hill+Knowlton Strategies, told the Mounties in an interview that a brown envelope with the cabinet documents appeared the next day at his downtown Ottawa office.

At the time, Matchett was working for the Atlantic Canada Opportunities Agency, but later moved on to a position at Public Services and Procurement Canada.

CBC News has reached out to Matchett on several occasions since his name appeared in the court documents and has not received a response.



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Fiat Chrysler to put assembly plant in Detroit area

Fiat Chrysler to put assembly plant in Detroit area

Fiat Chrysler will open another assembly plant in the Detroit area, according to a person familiar with the automaker’s plan.

The source says the plant will produce SUVs but did not specify when the plant will open, or how many jobs it will create. The person spoke on condition of anonymity because the plan has not been made public.

Fiat Chrysler declined to comment Thursday.

Unifor’s Local 444 President Dave Cassidy said he knows of some discussions but he doesn’t have any details. 

The Detroit News reported Thursday that Fiat Chrysler plans to reopen a former engine plant on the city’s east side to build SUVs with three rows of seats, starting with the 2021 model year.

The plant will employ 100 to 400 people, the news paper said.

That engine plant has been closed since 2012.

The decision comes with General Motors announcing recently that it plans to cut up to 14,000 jobs in North America.

Five General Motors plants are also planned to be unallocated in 2019 on both sides of the border, with plans to focus more on autonomous and electric vehicles.



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Cannabis producer Aphria to review acquisition slammed by short sellers

Cannabis producer Aphria to review acquisition slammed by short sellers

Marijuana producer Aphria Inc. says its board of directors has appointed a special committee of independent directors to review the company’s acquisition of Latam Holdings Inc., which has been criticized by short sellers.

The company says it remains confident in the deal, but is undertaking the comprehensive review in the face of what it called “inaccurate and misleading accusations” by the short sellers.

Quintessential Capital Management and Hindenburg Research have alleged that the cannabis grower’s acquisition of assets in Colombia, Argentina and Jamaica totalling $280 million US from Scythian Biosciences were “largely worthless.”

The accusations Monday put the company’s shares into a tailspin. They dropped sharply three days in a row and recovered slightly on Thursday.

New allegations

Hindenburg released a second report on Aphria on Thursday, alleging irregularities around another of the company’s international acquisitions, Liberty Health Sciences.

The report says that it was purchased through a newly formed shell company that netted the holders an estimated $5 million in six days.

“Unnamed individuals bought 242 million shares of Liberty in a highly dilutive $0.001 private placement mere days after Aphria announced its intention to purchase its shares at 208 times the price,” the report says.

The Leamington, Ont.,-based cannabis company says its special committee includes John Herhalt, Shlomo Bibas and Tom Looney.

Herhalt, who is the lead independent director and the head of the audit committee, will lead the special committee.

Shares in the company were up about 32 per cent, or $1.63, at $6.63 in trading on the Toronto Stock Exchange Thursday.



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U.S. stocks plunge following Huawei arrest

U.S. stocks plunge following Huawei arrest

Stocks are plunging again as the arrest of a senior Chinese technology executive threatened to worsen trade tensions between Beijing and Washington.

A steep drop in Boeing, which would suffer in an extended trade battle, helped drag the Dow Jones Industrial Average down more than 600 points Thursday morning, rebounding slightly in the early afternoon.

News broke Wednesday that Meng Wanzhou, the chief financial officer and deputy chair of the board for the Chinese tech giant Huawei, was arrested in Vancouver Saturday.

Traders shovelled money into bonds, a signal they see weakness in the economy ahead.

The price of oil fell 3.8 per cent as OPEC leaders gathered to discuss production cuts, which traders suspect may not reverse a plunge in crude.

The Dow was down 502 points in early afternoon trading, or 2.15 per cent, to 24,524.39

Canada’s main stock exchange, the S&P/TSX composite index was down 329.45 points or 2.17 per cent to 14,853.19. 

The S&P 500 index lost 44.28 points, or 1.64 per cent, to 2,655.78.

The Nasdaq dropped 83.35 points, or 1.16 per cent, to 7,075.08.

The yield on the 10-year Treasury fell to 2.84 per cent.



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Dollarama reports $133.5M profit in 3rd quarter

Dollarama reports $133.5M profit in 3rd quarter

Dollarama Inc. says it earned $133.5 million in its latest quarter, up from $130.1 million a year ago.

The retailer says the profit amounted to 41 cents per diluted share for the company’s third quarter, up from 38 cents per share in the same quarter last year.

Analysts on average had expected a profit of 42 cents per share for the quarter, according to Thomson Reuters Eikon.

Sales for the quarter ended Oct. 28 totalled $864.3 million, up from $810.6 million, while comparable store sales grew 3.1 per cent compared with growth of 4.6 per cent in the same quarter a year ago.

The comparable store sales growth was due to a 4.0 per cent increase in average transaction size, partially offset by a 0.9 per cent drop in the number of transactions.

Dollarama says the rate of comparable store sales growth in the most recent quarter reflected its decision to strategically limit price increases in recent quarters.



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New Tim Hortons coffee lids leak too much, some customers say

New Tim Hortons coffee lids leak too much, some customers say

New Tim Hortons coffee lids were supposed to reduce that pesky leakage problem, but some customers claim they’ve actually made it worse.

Meanwhile, the company insists many customers have given the lids a solid thumbs-up.

The restaurant chain started testing a revised design — a raised lid with a maple leaf insignia — in six locations in August following complaints that its standard, flat lids leaked too much.

When Tim Hortons recently introduced its new lids to about 100 more locations across Canada, the reviews started pouring in on social media. Some customers voiced their approval, but others complained that the revamped design causes even more spillage.

So far, the complaints have been anecdotal and it’s hard to know how many people who have tried the new lids have an issue with them. But customers with gripes are making themselves heard. 

“They came out with this great announcement that they were finally going to fix this [leakage] and it seems to be slightly worse,” customer Chris Hammond told CBC News.

He posted a complaint on Facebook after noticing a problem as soon as he was served his first coffee with the new lid at a Tim Hortons in Waterloo, Ont., last week. 

“There was already coffee on the top of it and it was coming out of the air-hole and the [drink] sealing-hole,” he said. “The first thing I said was, ‘Wow, that seems to leak more than the last one I got.'”

Olivia McKague in Kitchener, Ont., took this photo of her Tim Hortons coffee with the new lid that was placed in her car. (Olivia McKague)

Olivia McKague was introduced to the new lid at a Tim Hortons in Kitchener, Ont., a couple weeks ago. She said it leaked from both the top and the sides, leading to major spillage during her morning commute.

“In that seven minute drive, I had coffee spilt down the sides of my [car] console. I can’t be that wild of a driver,” she said.

“I get that the business is always changing and that Tim Hortons has to keep up with changes, but I just wish they’d bring back the old lid.”

Some people love it

Tim Hortons said the lids are still in the test-phase and it continues to assess feedback from customers.

“We understand that our guests feel very passionate about making sure we get it right,” said company spokesperson Jane Almeida in an email to CBC News.

However, she said that much of feedback so far has been “overwhelmingly positive,” with nine out of 10 customers declaring they preferred the new lid during the first trial phase.

“Canadians especially loved the Canadian maple leaf design,” she said. 

The new lids are part of a series of changes for Tim Hortons which has seen its public image tarnished following a takeover by Restaurant Brands International (RBI) which is majority-owned by global investment firm 3G Capital.

Ongoing disputes between RBI and some Tim Hortons franchise owners have spilled over into public view, including allegations of mismanagement that devolved into multiple lawsuits last year.

This year, the retailer has tried to boost its image by announcing upgrades such as a children’s menu, a $700 million renovation plan for its restaurants and a commitment to more environmentally friendly, less leaky lids.

Along with fine-tuning its design, Tim Hortons said over the next few months it will test and eventually transition its lids from from polystyrene to polypropylene, a more widely recycled material.

For years, Tim Hortons customers have complained about coffee leakage caused by its flat lids. (CBC)

Meanwhile, customers who disapprove of the revised lids are hoping to influence the retail chain before they become a done deal.

On Sunday, Alex MacIntyre sent Tim Hortons a Facebook complaint — and it actually has nothing to do with leakage. His gripe is that the lid’s drink opening is much smaller than before, so he can no longer gulp down his coffee the way he enjoys.

“Sipping coffee isn’t my thing,” said MacIntyre who was introduced to the new design at a Kitchener location.

He believes the smaller opening could lead to problems for people who drink coffee and drive.

“Now I’ve got to tilt my head back further. I’m taking my eyes off the road.”

A McDonald’s coffee lid (left) and a Starbucks lid. (CBC)

Retail expert Brynn Winegard hasn’t tested the new lids, but suspects at least some of the gripes are rooted in a resistance to change from long-time customers.

“To some extent, there’s always going to be backlash associated with change.”

She said that the new lid appears very similar to a design used by other popular coffee chains such as Starbucks and McDonald’s and that, over time, customers will probably warm up to it.

“Very likely, once they sort of acclimatize to it, you won’t hear much more about it.”

McKague may never become acclimatized. She said the new lids have inspired her to starting making coffee at home.

MacIntyre said no matter what kind of lid is served, he likes Tim Hortons coffee too much to do anything too drastic.

“I’m not going to boycott them over a lid change.”





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