May 28, 2020
Housing Markets Will Begin To Recover Mid-2021
Economic uncertainty stemming from containment measures of COVID-19 and falling oil prices is affecting all sectors of Canada’s real estate market, says the Canada Mortgage and Housing Corporation (CMHC). Its report, ‘The Housing Market Outlook - Special Edition’ (HMO) says the housing market will see declines in 2020 and should start to improve by this time next year. However, housing starts, sales, and prices are likely to stay below their pre-COVID-19 levels into 2022. Severe disruptions to the economy due to the COVID-19 pandemic have placed unprecedented pressures on employment, incomes, migration, and financial markets, while lower oil prices are likely to exacerbate declines in Canada's oil-producing provinces. Housing prices could fall by as much as nine to 18 per cent from first quarter levels this year before they begin to recover in 2021. As well, restrictions on construction activity are leading to a sharp decline in housing starts. The forecast indicates that housing starts could decline by as much as 75 per cent from the first quarter level before starting to recover by the second half of 2021. Home sales in Canada could experience as much as a 29 per cent decline from pre-COVID-19 levels before slowly recovering post 2022.
DIY To Drive Home Improvement Product Market
Amid the COVID-19 crisis and the looming economic recession, the global home improvement products market will grow by a projected US$210.9 billion at a compound annual growth rate (CAGR) of 3.4 per cent through 2028, says a report by ReportLinker. The do-it-yourself (DIY) segment is forecast to grow at over 3.3 per cent and reach a market size of $812.2 billion by the end of the analysis period. The report says that as an unusual period in history, the coronavirus pandemic has unleashed a series of unprecedented events affecting every industry. The DIY market will be reset to a new normal which, going forward in a post COVID-19 era, will be continuously redefined and redesigned. Staying on top of trends and accurate analysis is paramount now more than ever to manage uncertainty, change, and continuously adapt to new and evolving market conditions.
April Building Permits Plummet
The total value of building permits issued by Canadian municipalities plummeted 17.1 per cent to $6 billion in April, says Statistics Canada. The decrease was the largest decline since a similar drop in October 2008 during the financial crisis. When combined with the March decline, the value of building permits has fallen by 28.1 per cent from February levels. Declines were reported in eight provinces, with the largest in Quebec (-34.1 per cent) and Ontario (-20 per cent). Although most municipalities were still issuing permits in April, Quebec's decision to shut down non-essential construction activity due to the COVID-19 pandemic led to it posting its largest month-over-month percentage decline on record. Permits issued for single family dwellings fell 35.9 per cent to $1.4 billion, a record month-over-month decline and almost double the next largest decrease since 2002. Multi-family dwellings was the only component to show an increase at the national level in April, up 4.8 per cent to $2.6 billion. The value of commercial permits was down 21.5 per cent to $1.2 billion for the month.
ODL Expands Textured Glass Offerings
ODL, Inc., a supplier of decorative and clear doorglass and entry treatments, has expanded its textured glass offerings with textured glass offerings in simulated divided lights (SDLs). SDL is able to mimic the appearance of true divided light doorglass by applying external grilles to panes with a spacer bar in between to add dimension. With the addition of these textures – blanca, chinchilla, micro-granite, and streamed – ODL’s SDL offerings complement a range of architectural trends and add additional design elements to doors in an array of privacy levels. All SDL configurations are available in energy-efficient, Low-E doorglass, which helps meet ENERGY STAR requirements when used with an ENERGY STAR qualified door or sidelight.
May 27, 2020
West Fraser Restarting Operations
West Fraser Timber Co. Ltd. is in the process of restarting operations. During March and April, the company significantly reduced lumber and plywood production in response to rapidly changing market demand and to comply with mandated and recommended health and safety guidelines related to the COVID-19 pandemic. During May, it substantially resumed lumber and plywood production with only a few facilities operating at less than full schedules. The company says it will continue to adjust operating schedules in both the U.S. and Canada as necessary. With lumber, both prices and volumes have rebounded compared to the end of the first quarter, particularly for southern yellow pine (SYP). The company expects that demand for its wood products will be volatile over at least the balance of the year in response to the ongoing economic and other impacts of the COVID-19 pandemic.
Dörken Systems Offers Free Learning Series
Dörken Systems Inc. is launching a learning series, ‘Building Science Deconstructed,’ aimed at providing the building industry with accessible and free education focused on better building practices, technology, and building science. The company decided to launch the series because it believes the building industry has, and will continue to play an integral role in managing a global pandemic despite experiencing individual hardships. It says that to shorten the economic recovery process, “it is necessary to resume work as quickly as possible and to know ahead of time what’s available to do so successfully.” The series features building science experts including Dr. John Straube, Dr. Joe Lstiburek, Matt Risinger, Justin Wilson, and Gord Cooke.
Canada Post Says Delays Will Continue
Canada Post says Canadians should anticipate parcel delays for the foreseeable future, even though it is making deliveries at record levels. The organization says it is responding to changes and increases in consumer shopping while maintaining physical distancing measures in all of its facilities due to COVID-19. It is delivering in record numbers and also handling a wider variety of items. The number of larger, household items like mini-fridges, patio furniture, and barbecues have also increased. These bulky items often require a two-person lift which creates additional safety challenges and delays. Canada Post says it is taking steps to respond to the changes while maintaining physical-distancing. That includes processing and delivering on weekends and additional support from trained temporary employees. As well, some parcels may be transferred to other Canada Post locations for processing based on capacity.
Sollio Cooperative Group Partners With EQ Care
Sollio Cooperative Group has chosen EQ Care to deliver telemedicine services for employees of its parent company and three divisions, Sollio Agriculture, Olymel, and BMR Group. Sollio Cooperative Group's workforce will benefit from on-demand, virtual access to doctors, mental health specialists, and other medical and paramedical professionals 24 hours a day, seven days a week in English and French.
Home Hardware Adds Merchandise Directors
Michael Robert and Lee Hooper are merchandise LBM directors at Home Hardware Stores Ltd. They will be responsible for the development and deployment of the LBM program for all building centre locations. Robert has held executive positions at Canadian Tire and Lowe’s Canada and Hooper has held executive positions at Southwire Canada and Nestle Waters.
May 26, 2020
All Major Housing Markets Slumping – Except One
As housing markets across the nation fall into the slump phase of the real estate cycle, one city is holding on, says the Real Estate Investment Network (REIN) in its ‘COVID-19 Special Edition: Real Estate Cycle Update’ report. The report says all major real estate markets in British Columbia, Alberta, and Ontario are on a steady decline due to the economic impact of the pandemic shutdown and restriction measures except for one – Ottawa, ON. REIN says this exception may be because Ottawa is home to Canada’s federal government and is insulated to some extent to the massive pandemic-related joblessness impacting the country. It also says that while the slump is generally characterized as market slowdown, it can also be an excellent time for investors to take advantage of the opportunities that are bound to hit the market sooner or later.
Network Of Advisors Available For SMBs
Small- to medium-sized businesses (SMBs), not-for-profit organizations, and charities are among those most impacted by the current pandemic and will now have direct access to a network of qualified business advisors to help guide them courtesy of a government-funded program from the Canadian Chamber of Commerce. The program, called the Business Resilience Service (BRS), is run through the Canadian Chamber’s Canadian Business Resilience Network in collaboration with EY and with support from Chartered Professional Accountants of Canada (CPA Canada) and Imagine Canada. The BRS program will provide options for any vulnerable SMBs to immediately connect with experienced accounting and tax professionals across the country from professional services firms. The program, delivered to organizations free of charge, will provide guidance on program options and eligibility and rapidly direct businesses to the most appropriate support organizations. It will also help organizations make decisions to support recovery plans and provide real time insights and feedback to policymakers. The program will be provided for four weeks from May 25.
RCC Wants Moratorium On Commercial Evictions
The Retail Council of Canada (RCC) is calling on the Ontario government for a moratorium on commercial evictions. “Collectively, our members represent over 83,000 storefronts, restaurants, and hotels in Ontario,” it says. In an open letter, the council drew attention to the urgent need for an immediate moratorium on commercial evictions, retroactive to April 1 and extending to August 31, in order to match the end of the Canada Emergency Commercial Rent Assistance (CECRA) program application period (OCECRA in Ontario). “Rent relief remains a priority issue for our members and we continue to be deeply concerned that many landlords will ignore this voluntary program, which will inevitably result in a vast number of store closures. We are appreciative of the efforts that governments across the country have put into creating programs to avert layoffs and closings but, the reality is, retailers with severely reduced revenues have no ability to pay their rent.” In fact, 48 per cent of RCC members say they have not been able to pay their rent at all and 34 per cent say that landlords had threatened to either change their locks or evict them as a tenant. “That is why it's critical for all governments, including Ontario, to do everything possible to incite landlords to do the right thing in helping to prevent closures and, ultimately, job losses.”
Drone Delivery Canada Testing Heavy-duty Drone
Drone Delivery Canada Corp. says it will begin the commercial testing of the Condor, its heavy-lift, long-range cargo delivery drone. The Condor has a lifting capability of 180kgs (400lbs) of payload, a travel range of 200kms and an operating speed of 120kph. The multi-package payload compartment is designed to carry approximately 20 cubic feet of cargo. This phase of testing for ‘Beyond Visual Line of Sight’ (BVLOS) flight is taking place at the Foremost UAS Test Range in Alberta and will test the long-range and heavy-lift capabilities of the drone. The company is currently in discussions with various potential customers that all have expressed a strong interest in the Condor. This has particularly been the case under the current pandemic situation with the Condor interest to connect remote communities to aid in fighting COVID-19. The Condor measures 22-feet long, 5-feet wide, and 7-feet tall. It has a rotor diameter of approximately 20 feet and is capable of vertical takeoff and landing. It is equipped with DDC’s proprietary FLYTE management system which is the same platform used in all of DDC’s cargo delivery drones.
IPG Has Modest First Quarter
Intertape Polymer Group Inc. (IPG) had revenue of $278.9 million for the first quarter of 2020, an increase of 0.4 per cent over revenue of $277.9 million in the first quarter of 2019. The increase was primarily due to an increase in volume/mix and additional revenue from the Nortech Acquisition and partially offset by lower selling prices. Gross margin for the quarter increased to 21.1 per cent from 20.8 per cent. Net earnings were $14.2 million compared to $10.5 million last year and adjusted net earnings were $12.9 million compared to $12.2 million. Adjusted EBITDA decreased two per cent to $37.5 million year-over-year.
May 25, 2020
March Retail Sales Drop
Retail sales fell for the first time in five months, plunging 10 per cent to $47.1 billion in March, says Statistics Canada. This drop is the largest on record and is comparable to the retail sales decline observed in the U.S. (-7.1 per cent) and other countries in the wake of COVID-19. Record declines at motor vehicle and parts dealers, clothing and clothing accessories stores, and gasoline stations led the March decrease. Sales in the building material and garden equipment and supplies dealers were $3.3 billion for March, up 1.5 per cent year-over-year. Sales were down in six of 11 subsectors, representing 39.2 per cent of retail trade. Retail sales in volume terms declined a record 8.2 per cent. The COVID-19 pandemic caused many Canadian retailers to open or expand their eCommerce platforms in March in response to physical distancing measures and storefront closures. On an unadjusted basis, retail eCommerce sales were $2.2 billion in March, accounting for 4.8 per cent of total retail trade. This uptick in retail eCommerce was atypical for March and similar to the pattern normally observed at the start of the annual holiday shopping period. On a year-over-year basis, retail eCommerce increased 40.4 per cent, while total unadjusted retail sales declined 9.6 per cent.
Consumers Planning Purchases Despite Pandemic
While consumers are beginning to make their planned purchases, many are now less confident the pandemic will end quickly. Last month, the majority of U.S. consumers (75 per cent) believed this crisis would end by the end of the year; however, significantly less consumers (56 per cent) now believe the crisis will end this year, says TraQline in its May ‘COVID-19 Consumer Sentiment’ report. In an attempt to capture their share of reduced consumer purchases, retailers have been aggressive in offering deals. While these may not meet overall sales goals, it does appear to have had a positive effect, encouraging consumers to make their planned purchases rather than continue to delay them. Across TraQline’s key categories, the percent of consumers planning a purchase remains unchanged (40 per cent). However, among consumers who already planned a purchase, the number of consumers waiting to make purchases have decreased by as much as 10 basis points. The categories where most people are choosing not to wait are plants/garden supplies, followed by electronics and paint and painting supplies, power tools, kitchen and bath fixtures, and furniture. Additionally, more consumers are planning and moving forward with home improvement projects in May versus in April (one-quarter versus one-fifth, respectively) despite the inherent complexity of managing those projects in a pandemic.
Bed Bath & Beyond Plans To Re-Open Stores
Bed Bath & Beyond Inc. plans to re-open more stores and further expand store fulfillment services as part of its phased approach to re-opening stores across North America. The retailer plans to re-open approximately 600 additional stores to the public, including approximately 500 Bed Bath & Beyond stores across North America by June 13. It also plans to expand contactless curbside pickup services to approximately 1,350 stores, adding a further 600 additional locations. Contactless curbside will be available at approximately 90 per cent of the company's total store fleet across the U.S. and Canada. These changes mean the retailer will bring approximately 11,000 associates back from furlough.
Scheatzle Joins Tarkett
John Scheatzle is president of residential business in North America with Tarkett, a manufacturer of sustainable flooring. He brings more than 30 years of experience to the role, most recently as president of NobelClad, the welding division of DMC Global.
Acquisition Drives ADS Earnings
Advanced Drainage Systems, Inc. (ADS) had net sales of $370.8 million for the fourth quarter of fiscal 2020, an increase of 36.2 per cent compared to net sales of $272.2 million in fiscal 2019. Net income increased 86.6 per cent to $3.5 million year-over-year and adjusted EBITDA increased 95.6 per cent to $72.1 million. Gross profit increased 82.8 per cent to $108.8 million as compared to $59.5 million in the prior year. The increase is primarily due to the acquisition of Infiltrator Water Technologies, favourable material costs, and increases in both pipe and allied product sales.