Stock market news for investors: Transat, Empire and Algoma report earnings

• Transat A.T. Inc.
• Empire Company Ltd.
• Algoma Steel

Transat currently flies to only two U.S. destinations, in Florida. But those nearly 300 trips per month, while shorter and lower priced, still make up nearly 12% of its total flights.

The company also opted to cut capacity to the state by about 10% last month as bookings declined amid the backlash to tariff threats levelled by U.S. President Donald Trump as well as a weak loonie, according to figures from aviation data tracker Cirium.

The mood of uncertainty hanging over the North American economy may result in more last-minute bookings as customers consider whether to spend their weaker Canadian currency on travel, or if they want to visit a country whose leader has launched annexation threats and 25% tariffs on billions of dollars in Canadian goods.

“People potentially will hesitate before making any bookings,” Guérard said, pointing to the “unstable economic environment.”

“Things are looking good, for now”—with bookings, at least.

Planes are another story. Air Transat’s fleet continued to be deprived of six to seven planes over the winter, depending on the week.

The airline is one of many hit by a recall of turbofans from aircraft engine giant Pratt & Whitney.

“We continue to actively manage the severe negative impact caused by Pratt and Whitney GTF engine issues,” said Guérard, adding that she expected the groundings to persist through the year.

Transat reported a net loss of $122.5 million in its first quarter, double the $61-million in losses from the same period the year before. However, its adjusted net loss of $75 million marked a mild improvement from a $76-million loss a year earlier. Unfavourable foreign exchange rates help explain the worse performance on net losses, the company said.

On an adjusted basis, Transat said it lost $1.90 per share in the quarter ended Jan. 31, compared with an adjusted loss of $1.97 per share in the same three months last year.

Revenue for the quarter rose nearly 6% year-over-year to $829.5 million from $785.5 million.

The increase came as traffic expressed in revenue passenger miles—a metric tallying the number of miles travelled by paying customers—rose 1% year-over-year. 

Empire, which owns multiple banners across the country including Sobeys and FreshCo, has a roster of good alternatives in most categories, said Medline, but produce is the hardest to replace. 

“In Canada, in the winter, we do not always have viable alternatives,” he said.

“We could see an impact here, either through increased costs or reduced assortment, if the product is no longer competitive on our shelves over time.” 

However, Medline said Empire is working with its suppliers to ensure that unnecessary costs don’t get passed to customers, and said some suppliers are proactively looking for solutions. He gave the example of chocolate maker Lindt, which is shifting its production so that all the chocolate supplied to Canada will come from Europe instead of the U.S. by this summer. 

Canada is in the midst of a trade war with the U.S. after President Donald Trump enacted sweeping tariffs on Canadian goods, and Ottawa has responded with two rounds of retaliatory tariffs on U.S. imports. 

Medline said he believes Empire and the industry as a whole can “roll with the punches,” and that they won’t be highly affected by tariffs—at least not directly.  

“Ultimately, the biggest risk for us is not actually in our own business, but the impact on the Canadian economy as a whole,” he said. 

“I do not want to downplay this. A weaker consumer environment will hurt the retail sector as a whole.”

Empire reported a third-quarter profit of $146.1 million as its sales rose during the period.

The parent company of grocery retailer Sobeys says the profit amounted to 62 cents per diluted share for the 13-week period ended Feb. 1, compared with a profit of $134.2 million or 54 cents per diluted share a year ago.

On an adjusted basis, Empire says it earned 62 cents per diluted share in its latest quarter, which was the same compared with its third quarter last year.

Sales for the quarter totalled $7.73 billion, up from $7.49 billion a year earlier.

The increase came as same-store sales rose 2.5%. Same-store sales growth, excluding fuel sales, amounted to 2.6%.

The growth was supported by stronger top-line performance in both full-service and discount banners, said Medline. He said the gap between the two continues to decline as previously mentioned “green shoots” of normalizing consumer behaviour continue to grow.

Other signs of this normalization include outsized growth in items like meat and produce, a growing basket size and a decline in people opting for discounted items, he said.

Another sign is consumers are shopping at fewer stores, said Pierre St-Laurent, chief operating officer. 

Medline also had sunny remarks on Empire’s e-commerce business. Total sales growth was 72% between both the grocer’s in-house service Voilà and third-party services like Instacart and UberEats, he said. 

“We are excited by the growth potential of our e-commerce business, and believe we have the right assets in place to effectively serve this growing market,” he said. 

The company’s operating income from investments and other operations decreased primarily due to increased member participation in the Scene+ loyalty program and redemption of loyalty points. 

“What we are seeing in these current times is very high member participation and very strong redemption rates,” said Matt Reindel, chief financial officer.

Competitor Loblaw took a similar hit in its most recent results for the same reason. 

Empire announced that Reindel is set to retire, with Constantine Pefanis taking on the role in May.

On the call, Medline commended Reindel for his leadership during the pandemic and the period of inflation that followed it. 

A day before U.S. President Donald Trump’s steel and aluminum tariffs—a 25% levy on all American imports of each material—were to kick in Wednesday, he threatened to slap Canada with double those levies. Trump said that was in response to Ontario implementing a 25% surcharge on energy exports to the U.S.

The day ended with Ontario Premier Doug Ford backing off from the export tax, and Trump’s 25% tariffs on Canadian steel and aluminum coming into force Wednesday.

Canada countered Trump’s move with 25% tariffs on $29.8 billion worth of American goods, which took effect just after midnight Thursday.

The federal government also said it will prioritize investments in projects that primarily use Canadian steel and aluminum as part of its response.

Garcia said that although he expects the tariffs to pose a “significant challenge” for Algoma, the company could have an opportunity to increase sales in the domestic market as Canadian imports of U.S. steel decline.

He said about 3.5 million tonnes of U.S. steel have entered the Canadian market over the past 12 months.

“That gives us a great opportunity with the tariffs that the Canadian government announced (Wednesday) to go out and capture more market share and more plate sales in Canada,” said Garcia, noting Algoma had been in discussions with potential buyers since the tariffs kicked in.

“To the extent that the defence spending and shipbuilding starts to ramp up in the Canadian market, we see that as a great opportunity, especially if the government implements ‘buy Canadian’ requirements for that build.”

On Wednesday, the Sault Ste. Marie, Ont., company reported a net loss of $66.5 million in its latest quarter ended Dec. 31, compared with a loss of $84.8 million a year earlier. Its net loss per diluted share was 61 cents, down from a net loss of 78 cents per share during the same period the previous year.

Garcia said the result reflected “the continued challenging conditions across global steel markets, particularly due to tariff uncertainty, which led to lower realized prices during the quarter.”

In addition to trade war tensions, he said steel pricing and customers’ buying behaviour were also affected by U.S. election uncertainty and interest rate concerns.

“Softer realized steel prices and higher costs more than offset higher shipments, leading to an overall decline in revenues,” said Garcia.