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Canadian corporations earned $77.3 billion in operating profits in the third quarter of 2008, up 7.6% from the second quarter. Profits in the non-financial sector grew 9.1% to $58.1 billion, while those in the financial sector increased 3.3% to $19.2 billion.
These results can be attributed to the strong performance by oil and gas extractors and petroleum and coal manufacturers, and improved margins for other industry groups, despite modest revenue growth.
Revenue growth slowed in the third quarter, but coupled with lower increases in expenses, profits came in higher for 13 of 22 industry groups. Oil and gas extractors and petroleum and coal manufacturers led the way. Banks and other depository credit intermediaries experienced the largest drop in the financial sector, while motor vehicle and parts manufacturers reported the largest operating loss in the non-financial sector.
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 net profits. Net profits represent the bottom-line profits earned by corporations after taxes and extraordinary gains or losses. Quarterly profit numbers referred to in the text are seasonally adjusted. |
Oil and gas extractors: Third straight double-digit increase
Oil and gas extractors earned $11.2 billion in operating profits, up 15.1%, as firms benefited from crude oil prices, which reached notable levels in the first part of the quarter. Since then, firms have indicated a potential for slower activity in light of retreating prices and tighter credit conditions.
Fertilizers help advance mining profits
Mining profits increased 24.7% to $2.7 billion, continuing the trend started at the beginning of the year. The sector benefited from strong prices for inputs to crop fertilizers.
Manufacturing increases on strength of petroleum and coal manufacturers
Manufacturers earned $13.4 billion in the third quarter, up 14.0%, with petroleum and coal manufacturers accounting for nearly one-third of the gain. Profits for petroleum and coal manufacturers increased by double-digits for the second consecutive quarter, aided by higher summertime gasoline prices.
Chemicals, plastics and rubber products manufacturers' earnings also advanced by double-digits, as fertilizer producers profited from strong demand.
Motor vehicle and parts manufacturers posted operating losses for the second consecutive quarter, amidst additional plant closures and layoff announcements.
Motor vehicle and parts dealers slow retail trade
Retailers' profits grew 3.2% to $4.8 billion, despite offsets from motor vehicle and parts dealers. The New Motor Vehicles Sales Survey showed sales of new vehicles declined in two of the three months in the quarter.
Transportation and warehousing: Grains and coal help profitability
Transportation and warehousing earnings increased 13.5% to $3.4 billion. Increased shipments for coal and grain boosted profitability for railways, while airlines dropped fuel surcharges in the quarter.
Financials increase despite declines in banking
Financial and insurers' earnings grew 3.3% to $19.2 billion in the third quarter, on the strength of insurance carriers. Life, health, and medical insurance carriers' profits grew despite flat revenue growth, as lower expenses in the quarter helped push profits higher.
Banking and other depository credit intermediaries provided a counterpoint for the financials, as interest revenue from all sources declined. This marked the fourth consecutive quarter in which operating profits have retreated for banks. The last time this occurred was in 1989.
Available on CANSIM: tables 187-0001 and 187-0002.
Definitions, data sources and methods: survey number 2501.
The third quarter 2008 issue of the Quarterly Financial Statistics for Enterprises (61-008-XWE, free) will be available soon.
Financial statistics for enterprises for the fourth quarter of 2008 will be released on February 26, 2009.
For more information, or to order data, contact Client Services (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) or Philippe Marceau (613-951-4390; philippe.marceau@statcan.gc.ca), Industrial Organization and Finance Division.
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