TSX closes slightly higher amid Suncor earnings miss, lower commodity prices

TORONTO – The Toronto stock market racked up a small advance Wednesday amid lower commodity prices and earnings misses from Canada’s energy sector.

The S&P/TSX composite index was ahead 15.95 points to 12,761.59 with advances led by defensive stocks such as consumer staples and blue chip segments including financials and telecoms. The TSX Venture Exchange was 3.55 points lower at 1,211.72.

Suncor Energy (TSX:SU) shares fell $1.85 or 5.38 per cent to $32.53 on heavy volume of 8.9 million shares after it said late Tuesday that its fourth-quarter net loss was $562 million, or 37 cents per share, compared with net earnings of $1.43 billion, or 91 cents per share, in the same period a year earlier.

Results at the country’s largest energy company were impacted by a $1.49-billion charge related to its long-shelved and economically “challenged” Voyageur oilsands upgrader.

Without the Voyageur charge, Suncor’s operating earnings were $1 billion in the quarter, or 65 cents per share. That missed the average analyst estimate of 76 cents per share, according to Thomson Reuters.

Big integrated oil companies such as Suncor face earnings pressure because of one common problem.

“What we’ve seen is Canadian energy stocks underperform global energy stocks and that’s due to pricing differentials due to pipeline capacity issues,” said Jeff Bradacs, portfolio manager at Manulife Asset Management.

Heavy crude, like that produced in the oilsands, has historically traded at a discount to WTI, a U.S. light oil benchmark priced at Cushing, Okla.

Recently, that price gap has at times widened to roughly $40 as pipeline bottlenecks prevent growing oilsands production from getting to the most lucrative markets.

“We do need Keystone XL and a number of other pipelines to come on to narrow that differential,” Bradacs said.

Meanwhile, the Canadian dollar was up 0.07 of a cent to 100.45 cents US.

U.S. indexes were lacklustre with the Dow industrials up 7.22 points at 13,986.52. The Nasdaq composite index dropped 3.1 points to 3,168.48 and the S&P 500 index inched up 0.83 of a point to 1,512.12.

North American indexes had also finished slightly higher Tuesday in the wake of strong purchasing managers data from both the eurozone and China.

It was the latest in a string of advances that took the TSX up two per cent in January while New York markets performed even better, with the Dow industrials rising six per cent to a fresh five-year high. But analysts question if the market is set for a pullback.

The energy sector fell 0.8 per cent as Husky Energy Inc. (TSX:HSE) also missed expectations as quarterly net income was C$474 million, or 48 cents per share, down from $526 million or 53 cents per share a year earlier. Husky’s adjusted income amounted to 50 cents per share, six cents per share below the consensus estimate and its shares were off 31 cents at $31.06. Elsewhere in the sector, Talisman Energy (TSX:TLM) gave back 12 cents to $12.42.

The March crude contract on the New York Mercantile Exchange had erased early losses amid data showing a smaller-than-expected climb in last week’s crude inventories, along with a decline in distillate stockpiles. But by the end of the session, crude closed down two cents to $96.62.

The consumer staples sector led gainers, up per cent with convenience store chain Alimentation Couche-Tard ahead $2.36 or 4.7 per cent to $52.60.

The financials sector was up 0.41 per cent, with Royal Bank (TSX:RY) up 63 cents at $62.67.

The telecom sector also lifted the TSX, up 0.47 per cent as Telus Corp. (TSX:T) ran ahead 70 cents to $67.53.

The tech sector was also supportive as Celestica (TSX:CLS) ran up 27 cents to $8.08.

BlackBerry (TSX:BB) was well off session highs and closed up four cents to $15.98 on top of a six per cent gain Tuesday amid high hopes for the new BlackBerry 10 product lineup, which was unveiled a week ago. The Z10 touchscreen was made available to Canadian consumers Tuesday.

Anecdotes from the U.K., where the phone launched last week, suggest the new BlackBerry is selling at a steady pace.

“Our U.K. store surveys following the recent launch of the Z10 smartphone indicated solid initial sales,” said Canaccord Genuity analyst Michael Walkley.

“However, limited initial supply was cited as the reason for early post-launch stockouts at some carrier stores versus overwhelming demand.”

The gold sector was ahead about 0.15 per cent while April bullion gained $5.30 to US$1,678.80 an ounce. Barrick Gold Corp. (TSX:ABX) gained 16 cents to C$32.58.

The base metals component was also up 0.15 per cent while March copper on the Nymex slipped three cents to US$3.74 a pound. First Quantum Minerals (TSX:FM) gained 19 cents to C$20.50.

In other earnings news, WestJet Airlines Ltd. (TSX: WJA) shares dipped 21 cents to $22.34 after it said net earnings in the most recent quarter were $60.9 million or 46 cents per diluted share on revenue of $860.6 million. That was up more than 70 per cent from a year ago. Full-year profit soared 63 per cent to $242.4 million from $148.7 million. WestJet also boosted its quarterly dividend by two cents to 10 cents per share.

TMX Group Limited (TSX:X) shares advanced $1.25 to $56.73 as it posted a profit of $32.8 million or 61 cents a share in the final quarter of 2012. Revenue came in at $181.1 million.

On an adjusted basis, the company that operates Canada’s largest stock exchange reported 95 cents per share of earnings after excluding the cost related to some acquisitions and to its restructuring last year.

Intact Financial Corp. (TSX:IFC) says its net profit soared to $181 million in the fourth quarter, as the property and casualty insurer benefited from improved operating results and higher investment gains. The company also says its quarterly dividend will rise by 10 per cent to 44 cents per share and its stock lost $2.14 to $63.54.