Tuesday Ticker: May 12, 2020

Toronto, Ontario — May 12, 2020 — In this week’s Tuesday Ticker, Magna’s Q1 report eases aftermarket concerns, while Axalta disappoints industry investors and gas prices see a small–but notable–rise.

Calmer Seas

Magna International’s Q1 report has revealed the Canadian auto part flagship is in far calmer seas than many analysts assumed.

According to the report, the first quarter brought in $8.7 billion in sales, or about $25 million more than predicted by several major analysts. Per-share earnings hit $0.86, well above the consensus estimation of about $0.75.

The news is welcome to anyone concerned about the social isolation era’s impact on the globe-spanning auto aftermarket. In January, Magna became one of the first businesses to encounter COVID-19-related turbulence, when it closed some of its factories in China in order to curb the spread of the disease.

Estimates place the economic impact of the disease on the company at about $1.35 billion, split between about a quarter-billion-dollar loss from operational costs to more than a billion dollars in lost sales.

With the release of the report, Magna’s share price rose from about $50–where it had been stable for the past three weeks–to about $55.

Chemical Burns

U.S.-based Axalta Coating Systems did not fare quite as well through the first quarter of 2020. The company earned US$0.98 billion (CAD$1.24 billion) over the first months of 2020.

In the same period of 2019, the business brought in about US$1.1 billion (CAD$1.37 billion).

According to its Q1 report, its shares each returned about $0.31, down about ten percent over the same period of 2020.

The news had little impact on Axalta stock, which is trading at about US$19.50 (CAD$24). Prior to the global collapse caused by the COVID-19 outbreak, the stock was trading just below the $30 point.

Petrol Pick-up

Gas prices are making a slow ascent in much of Canada. After weeks of rock-bottom prices, the loosening of social distancing restrictions in parts of the United States has sent prices up by about a dime across Canada.

A resurgence in demand, however, is unlikely to kickstart Canada’s oilfields. Unfortunately for industry workers, the overproduction of petroleum in Russia and Saudi Arabia means that it is economically unfeasible to compete.

Gas prices are also expected to cause the green economy to wilt. A new study from research and analysis firm MacKenzie Woods has found that EV sales in Canada may dip by almost a million in 2020, compared to 2019. In 2019, Canadians bought 2.2 million electric vehicles. In 2020, the firm estimates it will sell just 1.3 million.

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