Financial and taxation statistics for enterprises

Corporate operating profits staged a huge rebound in 2003 following a year of no growth at all. Corporations recorded profits of $187.5 billion, a 10.0% jump from 2002.

Profits had reached a record high of $191.5 billion in 2000, buoyed by high energy profits and the booming electronics and telecommunications industry. Subsequently, profit levels fell in 2001 and remained flat in 2002.

In 2003, corporations were successful in their realignment efforts and cost containment moves as operating revenues rose 3.2%, while growth in operating expenses was held to 2.7%.

The top five industries ranked by operating profits were: banking and other depository credit intermediation, oil and gas extraction and support activities, utilities, non-depository credit intermediation (finance, leasing and credit card issuing companies) and real estate. All industries, with the exception of air transportation, showed profits.

In the financial sector, industries showed an impressive 26.3% gain in profits following two consecutive years of decline. Their profits in 2003 amounted to just short of $50 billion.

Among non-financial industries, operating profits grew a more modest 5.0%, hitting $137.5 billion.

Growth in the non-financial group was constrained by manufacturing profits which fell 12.4% to $33.2 billion. Of 22 manufacturing industries, profits grew in only 7.

Exporting manufacturers were hit hard by an appreciating Canadian dollar compared with its US counterpart. Overall, profit margins for manufacturers dropped from 5.8% to 5.1% in 2003.

Relatively low mortgage and financing costs continued to stoke the red hot housing and construction markets. The construction industry recorded robust gains in 2003, but at a slower pace. After increasing 18.2% in 2002, operating profits rose 10.4% to $5.6 billion in 2003.

Operating profits were up for wholesalers (+8.7%) and retailers (+9.7%). Among wholesalers, building material and supplies wholesaler-distributors led gains, while building material and garden equipment and supplies dealers led the retail sector. This reflected the strength in the construction industry, given the low interest rates that encouraged borrowing for renovations and new home construction.

A strengthening economy in 2003 generated $40 billion in corporate income taxes payable to government treasuries, up 13.8% from 2002. The federal portion amounted to $27.8 billion, while the provinces claimed $12.2 billion.

Income taxes payable by the finance and insurance industries increased 88.4% to $12.7 billion. The banking and other depository credit intermediation industry accounted for more than three-quarters of the increase.

Corporate taxes payable by the non-financial industries fell 3.8% to $27.3 billion. The decrease came mainly from manufacturers whose tax liability fell $1.2 billion to $9.2 billion.

Available on CANSIM: table 180-0003.

Definitions, data sources and methods: survey number 2510.

The publication Financial and Taxation Statistics for Enterprises (61-219-XIE, $49), available soon, will provide a comprehensive statistical portrait of the financial performance of incorporated business enterprises for 67 industrial groupings.

For general information or to order data, contact Client Services (1-888-811-6235) or Louise Noel (613-951-2604; louise.noel@statcan.gc.ca). To enquire about the concepts, methods or data quality of this release, contact Paula Helmer (613-951-9852; fax: 613-951-0318; paula.helmer@statcan.gc.ca), or Ed Holmes (613-951-0584; fax: 613-951-0318; edward.holmes@statcan.gc.ca), Industrial Organization and Finance Division.