The trucking industry is one of the most reliable "canaries in the mine" for macro-economists.

Published yesterday the quarterly results of Canadian carrier TFI - formerly Transforce - add another worrying signal. This, even in the context of the normalization of rates expected since the end of the pandemic.

Over the first nine months of the year, sales fell by 19%, while operating leverage and fuel costs pushed operating profit down by 40%. Cash generation was maintained, but only thanks to a sharp reduction in working capital requirements.

The most severe beating came in the United States, where revenues fell by $1.1 billion over the period. On the other hand, business in Canada - which accounts for over a third of consolidated sales - remained stable.

The group, headed by the excellent Alain Bédard, remains aggressive - as we would expect from him - in terms of acquisitions: it has devoted the entire free cash flow generated over the first nine months of the year to the dollar, i.e. $618 million in US dollars, including asset disposals.

So far, TFI has been an exceptionally efficient acquirer. The group bet big on the takeover of UPS Freight - specialized in the difficult "less-than-truckload" segment - in the midst of a pandemic. Immediately restructured, it is now the main contributor to consolidated operating profit.

At fifteen times operating profit, TFI's valuation is unsurprisingly back around its historical average. Should the risk of recession be confirmed, a return to a low of ten or eleven times operating profit would appear more than likely.

Such a level would undoubtedly represent a very attractive entry point.