MISSISSAUGA, Ont. — The slide in consumer spending has squeezed Cargojet Inc.'s bottom line, its CEO says, as Canadians shell out less on goods that land on shelves and doorsteps after a trip by air freighter.
"Higher interest rates are starting to impact the household disposable incomes and we are observing a division in household spending," chief executive Ajay Virmani said in a statement Tuesday.
"The volumes for discretionary items are softening but the volumes for essential household goods are holding up well," he added.
The Mississauga, Ont.-based company, which provides time-sensitive overnight air freight services and aircraft leases, reported a third-quarter profit of $10.5 million in the quarter ended Sept. 30, down from $83.5 million in the same period the year before.
Virmani said Tuesday the company is trimming capital expenditures and "working on identifying every cost saving opportunity."
The cuts come after he said in August that Cargojet would rein in the "overspending" it greenlighted to meet the demand influx set off by the COVID-19 pandemic, with areas ranging from temporary labour to ground services potentially on the chopping block.
Virmani's comments on sagging consumer demand line up with broader spending trends.
A report from Royal Bank of Canada last month found that retail sales — both nominal and inflation-adjusted — declined as autumn kicked off.
"September spending data suggests Canadians have begun to tighten their belts," according to RBC's Oct. 12 report.
"Canadians are spending nearly 10 per cent more on essential items than they were just one year ago. At the same time, the surge in discretionary spending has dissipated."
Cargojet said its third-quarter revenue totalled $214.0 million, down from $232.7 million the year before.
On an adjusted basis, the company earned 30 cents per share, down from an adjusted profit of $2.18 per share a year earlier.
The outcome notched below analyst expectations of 73 cents per share, according to financial markets data firm Refinitiv.
Cargojet also raised its quarterly dividend by 10 per cent or 2.86 cents per share to 31.46 cents per share. The new dividend will be paid to shareholders of record at the close of business on Dec. 20 and will be payable on or before Jan. 5.
This report by The Canadian Press was first published Nov. 7, 2023.
Companies in this story: (TSX:CJT, TSX:RY)
The Canadian Press
