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Quarterly financial statistics for enterprises
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Canadian corporations earned $69.4 billion in operating profits in the second quarter of 2008, up 2.5% from the first quarter, helped by an increase in commodity prices.
Overall, 15 of 22 industry groups reported higher profits. Among the 15 industry groups that helped to push profits higher, 2 main groups (oil and gas extraction and manufacturing) led the way. The gains in manufacturing were primarily due to petroleum and coal products manufacturers. Offsetting some of these gains were declines in both depository and credit intermediaries and insurance and related carriers.
Profits in the non-financial sector grew 4.1% to $50.6 billion, while those in the financial sector declined 1.7% to $18.8 billion.
Crude and natural-gas prices push profits higher
Oil and gas extractors and refiners (petroleum and coal products manufacturers) continued to benefit from increased crude oil and natural gas prices in the second quarter, as both experienced strong gains in profits.
Mining profits advance on healthy demand
Mining profits advanced as prices for potash and other inputs to fertilizer strengthened, as worldwide demand for crop fertilizers continued to grow. In addition, coal (a key input into the production of steel) helped push profits higher, reflecting robust worldwide demand for steel.
Manufacturers continue to struggle with rising input costs
Excluding petroleum and coal manufacturers, profits for the manufacturing sector were relatively flat, dampened by higher input costs. The Raw Materials Price Index showed prices paid for raw materials increased in each month within the quarter.
Motor vehicle and parts manufacturers posted losses in the second quarter amidst on-going restructuring partly brought on by changing consumer preferences in light of high fuel prices.
Chemical, plastics, and rubber product manufacturers earned higher profits in the second quarter on the strength of fertilizer manufacturers.
Note to readersThese quarterly financial statistics are based upon a sample survey and represent the activities of all corporations in Canada, except those that are government controlled or not-for-profit. An enterprise can be a single corporation or a family of corporations under common ownership and control, for which consolidated financial statements are produced. Profits and earnings referred to in this analysis are operating profits earned from normal business activities, excluding valuation adjustments. For non-financial industries, operating profits exclude interest and dividend revenue and capital gains/losses. For financial industries, interest and dividend revenue, capital gains/losses and interest paid on deposits are included in the calculation of operating profits. Operating profits differ from after-tax profits, which represent the bottom-line profits earned by corporations. Quarterly profit numbers referred to in the text are seasonally adjusted. |
Transportation and warehousing: Fuel costs continue to undermine growth
Transportation and warehousing earnings were down, as higher fuel costs continued to hurt profit margins. Slumping shipments for automotive and lumber products continued to affect railway profits. Results from the April and May Railway Carloadings Survey show loadings of lumber were at their lowest for those months in eight years. Meanwhile, airlines responded by increasing fees.
Consumers continue to spend in the second quarter
Telecommunications' earnings grew in the second quarter as strong subscription growth, coupled with relatively new revenue streams such as wireless data plans, helped push profits higher. Retailers also saw their operating profits grow. However, this growth was the smallest in six quarters.
Banks lead the decline in the financial industry
The 1.7% decline to $18.8 billion in the financial sector represents the third straight quarter in which profits have decreased.
Banking and other depository credit intermediaries' earnings retreated for the third consecutive quarter, as a result of losses from exposure to asset backed commercial paper and lower investment banking revenue.
Available on CANSIM: tables 187-0001 and 187-0002.
Definitions, data sources and methods: survey number 2501.
The second quarter 2008 issue of the Quarterly Financial Statistics for Enterprises (61-008-XWE, free) will be available soon.
Financial statistics for enterprises for the third quarter of 2008 will be released on November 20.
For more information, or to order data, contact Louise Noel (toll-free 1-888-811-6235; 613-951-2604; iofd-clientservicesunit@statcan.gc.ca). To enquire about the concepts, methods, or data quality of this release, contact Boran Plong (613-951-2649; boran.plong@statcan.gc.ca), Philippe Marceau (613-951-4390; philippe.marceau@statcan.gc.ca) or David Sabourin (613-951-3735; david.sabourin@statcan.gc.ca), Industrial Organization and Finance Division.
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