Analysis
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First quarter 2012 (preliminary)
Operating profits for Canadian corporations amounted to $75.2 billion in the first quarter, virtually unchanged from the fourth quarter of 2011. Gains in the financial sector were largely offset by declines in the non-financial sector.
In the first quarter, 11 of 22 industries reported higher profits.
In the non-financial sector, operating profits in the first quarter decreased 5.9% to $54.4 billion, following the 6.4% gain in the previous quarter. Much of this decrease came from the manufacturing and the information and cultural industries. Partially offsetting this decline were gains in transportation and warehousing, construction and retail trade.
In the financial sector, operating profits increased 20.3% to $20.7 billion, following a 9.6% gain in the fourth quarter. Most of the first-quarter growth came from the insurance and depository credit intermediation industries.
On a year-over-year basis, operating profits for Canadian corporations were 4.6% higher in the first quarter than in the same quarter of 2011. Profits increased 3.1% in the non-financial sector and 8.7% in the financial sector.
Non-financial sector
Manufacturing profits decreased 16.2% to $13.5 billion in the first quarter as 8 of 13 manufacturing industries reported lower profits. Computer and electronic product manufacturers, motor vehicle and parts manufacturers and air, rail and ship products manufacturers led the decline.
Profits for computer and electronic product manufacturers were down 96.7% to $32 million compared with the previous quarter.
Profits for motor vehicles and parts manufacturers dropped 50.6% to $812 million, while profits for air, rail and ship products manufacturers fell 58.9% to $269 million.
Profits for information and cultural industries declined 22.7% to $4.0 billion, with telecommunications accounting for most of this decline. Profits for telecommunications fell 33.0% to $2.6 billion.
Profits for the transportation and warehousing industry were up 17.8% to $2.9 billion. Most of the growth came from transportation, where profits rose 38.1% to $1.5 billion.
For construction, profits rose 11.8% to $3.9 billion in the first quarter primarily on the strength of residential building construction, particularly of condominiums.
Retailers' profits increased 7.5% to $4.3 billion, while wholesalers' profits decreased 4.9% to $5.4 billion.
Profits for the oil and gas industry were up 8.2% to $3.7 billion. Mining profits declined 10.4% to $2.1 billion.
Financial sector
Profits in the financial sector amounted to $20.7 billion in the first quarter, the highest level since the $20.9 billion recorded in the third quarter of 2007.
Most of the first-quarter growth came from the insurance industry, where profits increased by $2.6 billion to $3.0 billion. The increase was led by life insurers, who experienced lower actuarial liabilities adjustments.
Profits for depository credit intermediaries, mainly chartered banks, rose 11.7% to $10.6 billion. This increase came from higher net interest revenue reported by chartered banks that have also transitioned to International Financial Reporting Standards (IFRS).
Note to readers
Quarterly financial statistics are compiled using financial information provided by enterprises that derive this data from their financial statements. Starting on January 1, 2011, Canadian publicly accountable enterprises are required to replace Canadian Generally Accepted Accounting Principles (CGAAP) with International Financial Reporting Standards (IFRS) when preparing their financial statements for fiscal years starting on or after January 1, 2011. Canadian private enterprises are required to replace CGAAP by Accounting Standards for Private Enterprises or IFRS. The adoption of new accounting standards by some enterprises since the beginning of 2011 may affect comparability with prior periods.
Quarterly profit numbers referred to in this release are seasonally adjusted and are in current dollars. The quarterly financial data for the period covering the first quarter of 2009 to the fourth quarter of 2011 inclusive have been revised following reconciliation to the 2009 and 2010 annual series. In addition, seasonally adjusted data have been revised back to 2009.
Quarterly financial statistics for enterprises 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 or control, for which consolidated financial statements are produced.
Profits referred to in this analysis are operating profits earned from normal business activities. For non-financial industries, operating profits exclude interest and dividend revenue and capital gains/losses whereas, for financial industries, these are included, along with interest paid on deposits.
Operating profits differ from net profits, which represent the after-tax profits earned by corporations.
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