Winnipeg Free Press

Winnipeg Free Press (Newspaper) - February 13, 2025, Winnipeg, Manitoba WINNIPEGFREEPRESS.COM ● B7 BUSINESS THURSDAY, FEBRUARY 13, 2025 CHRISTOPHER DROST / THE CANADIAN PRESS A snowplow waits its turn at a Tim Hortons drive-thru in Barrie, Ont. ‘The vast majority of our products come from Canada ... and we will make it even more Canadian,’ Tims president says. Tim Hortons monitors consumer demand as U.S. levy uncertainty weighs T ORONTO — The president of Tim Hortons’ Canadian and U.S. oper- ations is keeping his eye on the tariff feud that has broken out between the chain’s two most prominent mar- kets with the goal of dulling the effects of the spat for consumers as much as possible. “We are looking at every opportunity very closely to reduce the cost impact,” Axel Schwan said in an interview Wed- nesday. The focus comes as companies on both sides of the border and beyond brace for a period of tumult that could kick off if U.S. President Donald Trump makes good on his promise to impose tariffs on Canadian and Mexican goods in a few weeks. While automakers and others rely- ing on steel and aluminum are likely to take a large hit, food also stands to be impacted. With the growing season in Canada limited by its climate, the country often has to look elsewhere for produce like oranges and lettuce. But it also has strengths that Toronto-based Tim Hor- tons can leverage. Canada is a major supplier of the world’s canola, grains, potatoes, tomatoes and beef. As a result, Schwan said Tims’s scrambled egg wraps are packed with 100 per cent Canadian eggs and its cof- fee is roasted in Ancaster, Ont. “The vast majority of our products come from Canada, so that’s a very good starting point and we will make it even more Canadian,” he said. Tims has been working to make those ties more obvious as Canadians turn to supporting homegrown businesses in the face of potential tariffs. Over the weekend, it ran a Super Bowl ad reimagining the late Stompin’ Tom Connors hit The Hockey Song to call football “the second-best game you can name.” The spot ends with the mes- sage, “Sorry, not sorry. We’re proudly Canadian.” When it shared the spot online, com- menters cast doubt on the brand’s Can- adian-ness, pointing to the fact that 3G Capital, an investment office for a trio of Brazilian billionaires, has a stake in Tims parent company Restaurant Brands International. Schwan maintains “we are also the most Canadian brand, according to all the research that we have, and so that’s a really, really strong starting point.” He spoke to The Canadian Press on the same day as RBI, which also owns Burger King, Popeyes and Firehouse Subs, raised its quarterly dividend to 62 cents US per share, up from 58 cents US per share. The restaurant owner, which keeps its books in U.S. dollars, was encouraged to make the hike as its fourth-quarter net income hit US$361 million. The profit amounted to 79 cents US per share for the quarter ended Dec. 31, down from US$726 million or US$1.60 per diluted share a year earlier. On an adjusted basis, it earned 81 cents US per diluted share in its latest quarter, up from an adjusted profit of 75 cents US per diluted share a year earlier. Revenue totalled US$2.30 billion for the quarter, up from US$1.82 billion in the last three months of 2023, as sys- tem-wide sales totalled US$11.28 billion in its latest quarter, up from US$10.89 billion a year earlier. Overall comparable sales rose 2.5 per cent. In an earnings call meant to discuss the results, Joshua Kobza, the chief executive of RBI, highlighted Tims’s performance because the company notched its 15th consecutive quarter of positive traffic growth. While he attributed some of the in- crease to the company’s strength in sales during the morning, he also called out efforts to boost transactions it does later in the day by selling loaded bowls and flatbread pizzas, as well as cold and espresso-based beverages. To get those menu items into cus- tomer hands even faster, he said the company had invested in new espresso machines that are being tested at 100 locations and are “showing promising potential.” It has also zeroed in on speeding up drive-thrus and for the eighth consecu- tive quarter shaved down the amount of time the average car spends at the window on a weekday. It now sits at 28 seconds. Kobza estimates each one second re- duction in drive-thru time translates to about $30,000 in incremental annual sales per restaurant. “This solidifies Tims as one of the fastest drive-thru concepts in North America,” he said. — The Canadian Press TARA DESCHAMPS Coca-Cola eyes even more plastic to offset Trump’s aluminum tariff COCA-COLA may package more drinks in plastic as a result of U.S. President Donald Trump’s new tariff on alum- inum, the company’s CEO said. Asked during a Tuesday earnings call about the impact of a 25 per cent import tax on aluminum entering the country, James Quincey said when it comes to “ensuring affordability and ensuring consumer demand,” Coca-Cola has other package offerings “that will allow us to compete in the affordability space.” “For example, if aluminum cans be- come more expensive, we can put more emphasis on PET bottles,” Quincey said, referring to polyethylene terephthalate, the plastic commonly used in single-use plastic bottles and food packaging. Coca-Cola accounted for 11 per cent of branded plastic pollution in the world, according to a study published in April, and is one of the world’s top con- tributors to plastic pollution. In December, the company aban- doned its plastic reduction and reuse goals, announcing it had revised its climate goals to focus more heavily on the use of recycled materials instead of reducing virgin and single-use plas- tic — a move criticized not just for the potential impact on the environment and oceans bogged down by plastic pollution, but also for global health as more research emerges on the effects of microplastics on the human body. “Any increase in Coca-Cola’s plastic bottle use will directly harm the en- vironment — as well as the health of their customers,” said Emma Priest- land, global corporate campaigns co-or- dinator for the advocacy group Break Free From Plastic, in a statement. Studies have linked microplastics to colon cancer, lung cancer and some reproductive problems, as well as to in- creased risk of heart attack or stroke. Scientists have found microplastics and nanoplastics in the liver, placenta, blood, testicles and even the brain. Priestland said if the company was concerned about offsetting the cost of the aluminum tariff, executives should look toward investing more in reusable glass bottles instead of plastic. “Coca-Cola operates successful re- usable packaging systems around the world — this is what they should be doubling down on, not expanding plas- tic use,” she said. Trump’s executive orders, signed Monday, impose 25 per cent tariffs on imported steel and aluminum in an at- tempt to promote greater domestic steel industry production and employment. He imposed similar import taxes on steel and aluminum during his first term, but later amended them to permit continuing shipments from major U.S. allies such as Canada and Mexico and imposed quotas on some other coun- tries. Announcing the new steel and aluminum tariffs Tuesday, Trump said they would be enforced “without excep- tions or exemptions.” Though experts warn both consumers and U.S. manufacturers will likely bear the impact of the steel tariffs — a 2018 analysis of steel tariffs during Trump’s first term, published by the non-parti- san Peterson Institute for International Economics, found while it created jobs, it also hurt a variety of U.S. buyers — Quincey sought to assuage investors on Tuesday on the overall impact it will have on Coca-Cola’s bottom line. A 25 per cent increase in price is “not insignificant, but it’s not going to rad- ically change a multibillion-dollar U.S. business,” he said. “Between mitigation of supply chain, sourcing, weights of the cans, price in- crease of the cans at some level poten- tially, a switch to PET, it’s a manageable problem in the context of the total U.S. business,” he said. “It’s a cost. It will have to be managed.” — Washington Post VIVIAN HO LOS ANGELES — Thomson Reuters has won an early battle in court over the question of fair use in artificial in- telligence-related copyright cases. The media and technology company filed a lawsuit against Ross Intelligence — a now-defunct legal research firm — in 2020, arguing it had used materi- als from Thomson Reuters’ own legal platform Westlaw to train an AI model without permission. Judge Stephanos Bibas of the 3rd U.S. Circuit Court of Appeals issued a decision Tuesday that affirmed Ross Intelligence was not permitted under U.S. copyright law to use the company’s content in order to build a competing platform. Thomson Reuters and Ross Intelli- gence did not immediately respond to a request for comment. In his summary judgment, Bibas said “none of Ross’s possible defences holds water” and ruled in favour of Thomson Reuters on the issue of “fair use.” The “fair use” doctrine of U.S. laws allows for limited uses of copyrighted materials such as for teaching, research or transforming the copyrighted work into something different. Thomson Reuters’ win comes as a growing number of lawsuits have been filed by authors, visual artists and music labels against developers of AI models over similar issues. What links each of these cases is the claim tech companies ingested huge troves of human writings to train AI chatbots to produce human-like pas- sages of text, without getting permis- sion or compensating the people who wrote the original works. — The Associated Press Thomson Reuters scores win in AI copyright battles Forest carbon removal startup raises US$160M STARTUP Chestnut Carbon has raised US$160 million to plant, restore and manage trees on degraded farmland, generating carbon credits for custom- ers that include Microsoft Corp. The company’s goal: providing high-quality, nature-based credits that sidestep issues that have plagued car- bon markets. The Series B round, led by Canada Pension Plan Investment Board, comes less than a month after Chestnut signed an agreement with Microsoft to provide seven million tons of carbon removal credits. That’s the second-largest car- bon removal agreement the tech giant has struck. With a number of tech com- panies struggling to meet their climate targets due to a surge in energy-inten- sive data centres, carbon removal has taken on added importance. Nature-based carbon projects have come under scrutiny for delivering low-quality credits and don’t help the climate as much as they promise. That sowed distrust in the market and led to a downturn in the number of credits purchased. Chestnut’s approach addresses the “credibility crisis” of the nature-based carbon market, said investor Nancy Pfund, founder and managing partner of DBL Partners, which participated in the raise. Many of the company’s projects in- volve purchasing non-performing agri- cultural and pasture lands and planting trees rather than paying farmers to do so. About 80 per cent to 90 per cent of project costs are land purchases, which will allow Chestnut to better assess af- forestation efforts. The company has also developed a proprietary device that helps measure and track how much carbon is removed by their projects. “We can deliver the credits and at scale,” said CEO Ben Dell, who is also the founder and managing partner of energy investor Kimmeridge Energy Management Co. — Bloomberg News Intact reports record quarter after raising rates TORONTO — Intact Financial Corp. ended last year with its best quarter ever as its rate increases offset rising costs, while the insurer says it should be fairly buffered from potential tariff impacts. “In the context of economic and cli- mate uncertainties, we’ve proven that our organization is very resilient,” said chief executive Charles Brindamour on an earnings call Wednesday. The insurer reported net operating income of $4.93 per share in the quar- ter, up 23 per cent from last year. The results, along with a 16.5 per cent return on equity and generation of $2.6 billion in capital for the year, came de- spite $1.5 billion in catastrophe losses in 2024. Intact offset those losses in part through rising rates. The company says its Canadian per- sonal auto division saw total premiums up 12 per cent in the quarter from a year earlier thanks to double-digit rate increases, along with unit growth rates. In the Canadian personal property line, total premiums were up nine per cent, mostly from higher rates in a mar- ket that’s seeing higher demand and tight supply. The rising rates in auto come after sharp increases in costs have left the industry struggling at times with prof- itability that companies are still work- ing through, said Guillaume Lamy, sen- ior vice-president of personal lines. “We still see the industry as unprofit- able … we still think that there’s a lot of catch-up to do from an industry per- spective.” Inflation has stabilized, though, so Intact’s rate increases should gradual- ly normalize to the mid-to-high single digits this year, he said. “With our rates normalizing in 2025, we also expect retention to be further strengthened and our competitive pos- ition to improve,” said Lamy. The company said vehicle parts in- flation has stabilized, but it’s still see- ing cost inflation pressure from higher litigation, especially in Alberta and At- lantic Canada, while Ontario has seen more cost normalization after a series of government reforms. Alberta has also put in policy chan- ges but it’s still a difficult market, said Lamy. “The recent trends caused by the increased litigation and injury have eroded profitability,” he said. The potential for the U.S. to impose tariffs, and Canadian retaliation, could create cost pressures on the auto sec- tor, but Intact should be somewhat insu- lated, said chief operating officer Pat- rick Barbeau. Injuries and liabilities take up about half of claims costs and labour another 10 per cent, neither of which should see much inflation from tariffs. — The Canadian Press IAN BICKIS WSP Global releases 3-year strategic plan MONTREAL — WSP Global says it’s focus- ing on growth over the next three years as it comes off a spate of acquisitions. In its 2025-27 strategic plan released Wednesday evening, CEO Alexandre L’Heureux said it expects to exceed its previous financial targets and sees its revenues rising by 40 per cent. WSP has been eyeing larger acquisitions since summer, after working to integrate its sprawling operations as it snapped up smaller companies over the preceding two years. In October, it completed its acquisition of Power Engineers Inc., an Idaho-based consulting firm with 4,000 employees across the continent. Following a spate of takeovers, WSP worked last year to scrap digital barriers between offices scattered across 60 coun- tries. At least three-quarters of the firm now operates on a single software platform. — The Canadian Press ;