Falconbridge up next
The Globe and Mail -- Caroline Alphonso
After the rash of big-name earnings reports this week, investors get a bit of a breather today. There are still a handful of companies reporting their quarterly results today, but not quite as many or as well-known.
One mining company up at bat is Toronto-based Falconbridge Ltd., which is to report its third-quarter earnings.
On average, analysts polled by Boston-based research firm Thomson Financial/First Call are expecting the company to earn a profit of 7 cents a share, compared with a loss of 15 cents a year earlier. There's certainly a wide range of estimates among analysts, with some calling for a loss of 2 cents a share to others forecasting Falconbridge will earn as much as 17 cents in the quarter.
There are two things weighing on Falconbridge at present.
First, base metal companies, such as Falconbridge, are dependent on a cyclical recovery and currently there's considerable uncertainty about the global economy. Many analysts believe mining companies will post strong revenue and profit growth as industrial production ramps up with an improving economy.
Also, putting a bit of pressure on Falconbridge's stock is the creeping takeover by Noranda Inc. Investors doubt they will make money as a result of a takeover bid from Falconbridge's parent company. Noranda owns 57 per cent of Falconbridge.
Brian MacArthur, an analyst at UBS Warburg Inc., said he expects third-quarter earnings for Falconbridge to be "unfavourably impacted" by a decline in nickel and copper prices. This, combined with lower volumes because of maintenance or vacation shutdowns will certainly affect Falconbridge's earnings, he said.
Trade surplus slippage
Economists are expecting Canada's trade surplus for August, out this morning, to fall modestly from the previous month.
After ballooning in July to $4.9-billion, on the back of heavy demand for forestry products and autos, the trade gap -- the difference between exports and imports -- is forecast to come in at about $4.7-billion.
Economists at BMO Nesbitt Burns Inc. say that shipments were weaker in August because of some cooling off in auto production and slower U.S. industrial activity. Although they expect the shipments number to stay positive, it will certainly be weaker. Higher energy prices helped, but look for most exports to be hit by weaker U.S. demand.
Despite this bump in the road, economists say that even with the recent slowdown in U.S. demand, Canadian manufacturing and exports have remained generally strong.
FP........................................................
