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What’s happening: Shares of THOR Industries rose sharply on Tuesday, after the company released results for its fiscal third quarter.
What happened: The RV manufacturer reported upbeat quarterly results and also raised its earnings forecast for fiscal 2023.
However, RV sales at one of the company’s major regions contracted during the latest quarter.
How were the results: The Elkhart, Indiana-based company reported a double-digit decline in sales for the third quarter but the figure topped estimates.
Why it matters: THOR Industries, which sells towable and motorhome-type RVs, had witnessed heightened customer interest amid the pandemic, with people choosing against taking flights. The demand has waned since then and has been further hit by an uncertain economic and high rates environment.
Industrywide, RV shipments fell 45.4% year-over-year to 31,216 units in April, according to the RV Industry Association. RV shipments tumbled 52.1% year-over-year between January and April.
THOR Industries said its net sales from North American Towable RVs contracted by 57.4% year-over-year, while North American motorised RVs declined by 24.4%. However, RV sales in Europe climbed by 19.7% during the latest quarter.
The company’s consolidated gross profit margin fell 250 basis points year-over-year to 14.8%.
Management guided to consolidated net sales of $10.5-$11 billion for the full year, down from its prior forecast of $10.5-$11.5 billion. They also lowered their earnings guidance from the earlier $5.50-$6.50 per share to $5.80-$6.50 per share.
How shares responded: THOR’s shares climbed 17.7% to close at $93.15 on Tuesday, following the release of quarterly results. The stock has added around 13% over the past month.
What to watch: Investors will continue monitoring the economic environment, which could significantly impact the company’s overall results and margins ahead.
Context: The CAD/USD forex pair climbed on Monday, despite a decline in crude oil prices.
Details: The Bank of Canada is scheduled to announce its policy decision today. Markets widely expect the central bank to maintain its interest rates at 4.5%.
However, high inflation rates and strong growth reports from the country have increased speculations of the BoC being forced to extend its monetary tightening cycle.
Canada’s annual consumer prices rose 4.4% in April, from 4.3% in the prior month. The figure came in higher than market estimates of 4.1% and remains much higher than the BoC’s earlier forecast of inflation easting to 3% by mid-year.
Economic data released on Tuesday showed the Ivey PMI (purchasing managers index) falling to 53.5 in May, from 56.8 in the previous month. The figure was also sharply below market estimates of 57.2. The total value of building permits in Canada fell by 18.8% to $9.6 billion in April, following a 12.3% increase in the prior month. This was the weakest level since December 2020.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, also gained over 0.1% to 104.13 on Tuesday, exerting pressure on the CAD/USD forex pair.
Weakness in the price of crude oil, one of Canada’s major exports, limited gains for the loonie. WTI crude oil prices fell around 0.6% to close at $71.74 per barrel on Tuesday.
The CAD/USD forex pair added more than 0.3% to 1.3405 on Tuesday. Meanwhile, the S&P/TSX Composite index rose by 0.62% to close at 20,055.60.
What are expectations: Traders await the release of the Bank of Canada’s interest rate decision today. The Bank of Canada had kept its overnight rate unchanged at 4.5% at its April meeting and is expected to hold the rate this time as well.
Markets will also watch economic data on balance of trade and labour productivity from Canada today. The country’s trade surplus is expected to expand to C$0.97 billion in March, from C$0.6 billion in April. Analysts expect labour productivity in Canadian businesses to decline by 0.9% in the first quarter, after a 0.5% contraction in the fourth quarter.
Other Markets: European indices closed higher on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.37%, 0.18%, 0.11% and 0.38%, respectively.
France offered to help Ukraine after the Nova Kakhovka dam breach in the country. The news sent the safe-haven US dollar index slightly lower this morning.
Australia’s economy grew 0.2% in the first quarter of 2023, following a 0.6% expansion in the previous quarter. The country’s economy growing for the sixth straight quarter lent support to the AUD/USD forex pair.
Japan’s reserve assets declined slightly to $1.255 trillion in May, versus an eight-month high of $1.265 trillion in the prior month. Despite this, the JPY/USD pair rose in forex trading this morning.
The API said that US crude stockpiles fell by 1.710 million barrels in the week ended June 2, following an increase of 5.202 million barrels in the earlier week. However, WTI crude prices remained week this morning.
Brazil’s total production of cars, light commercial vehicles, trucks and buses jumped by 27.4% to 227,900 units in May, lending support to the BRL/USD forex pair.
Germany’s industrial production, South Africa’s foreign exchange reserves and RMB/BER business confidence index, UK’s Halifax house price index, France’s balance of trade, current account and foreign exchange reserves, Italy’s retail sales, Singapore’s foreign exchange reserves, US MBA mortgage applications, balance of trade, gasoline inventories, crude oil inventories, distillate stocks, Manheim used vehicle value index and consumer credit, Brazil’s inflation rate, Russia’s foreign exchange reserves, Turkey’s Treasury cash balance, as well as China’s foreign exchange reserves.
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