Canadian Corporations operating Profits on the Rise

Canadian corporations earned $54.1 billion in operating profits in the third quarter, up 7.9% from the previous quarter.

This increase follows three consecutive quarterly declines in operating profits.

Profits in the non-financial industries increased 10.4% from the second quarter to $41.7 billion, while profits in the financial industries were relatively flat as firms reported $12.4 billion in profits, up 0.3% in the third quarter. Overall gains were widespread, as 18 of 22 industries reported higher profits in the third quarter.

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 and 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 bottom-line profits earned by corporations.

Quarterly profit numbers referred to in the text are seasonally adjusted.

Energy: Higher oil prices help oil and gas extraction and petroleum and coal manufacturers post higher profits

Together, profits for oil and gas, and petroleum and coal increased 20.4% to $5.9 billion in the third quarter, marking their first increase in four quarters. Much of this gain came from rising oil prices.

Manufacturing profits increase for the first time in four quarters

Manufacturers reported $9.4 billion in operating profits in the third quarter, up 28.6% from the second quarter. Motor vehicle and parts manufacturers reported an operating loss of $100 million. However, this compares with an operating loss of $1.0 billion in the second quarter of 2009 and a loss of $1.7 billion in the first quarter of 2009. The results in the third quarter are partially attributable to government incentives in the United States, which spurred demand for Canadian automobile and parts exports to that country.

Transportation and warehousing post first substantial gain in three quarters

Transportation and warehousing earned $2.8 billion in profits in the third quarter, up 14.8% from the second quarter. Most of the gains were due to airlines, as they reported higher profits in the third quarter compared with the second quarter. However, revenue in the sector is still down compared with one year ago.

Operating profits for financial industries remain flat after three consecutive quarterly declines

The 0.3% increase in profits for the financial industries this quarter follows three straight quarterly declines in profits. Property and casualty insurance carriers posted significant declines this quarter as bad weather resulted in higher claims. Offsetting some of these declines were gains in banking and other depository credit intermediaries. Higher dividend revenue, commissions and fees contributed to the higher profits in the third quarter.

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