Auto industry posts highest revenues in seven years
Canada’s corporate profits continued to rise in the third quarter of the year, Statistics Canada reports, rising 3.7 per cent from the previous quarter. Companies earned a total of $90.2 billion from July to September, in both financial and non-financial sectors. This follows a 1.5 per cent gain in the second quarter and a 3.8 per cent gain in the first. Considered on a year-over-year basis, operating profits were up 8.8 per cent compared to Q3 2013. That rises to 12. 2 per cent when considering only the non-financial sector.
Manufacturing companies in nine of thirteen industries reported gains, and profits increased in this sector by 10.9 per cent, to $15.9 billion. The biggest single increase was in the energy industry which saw a 25.7 per cent rise in operating profits to a record $4.6 billion.
The auto and auto parts industry also posted the highest revenues in more than seven years, after a 3.9 per cent rise to $30.6 billion. This was the highest level of revenues since the second quarter of 2007, Statistics Canada says. Operating profits bounced back from a second quarter decline, rising 26 per cent to $1.3 billion. Strong car sales and “contained operating expenses” have made 2014 the best for the auto industry since 2002. In its latest report on the retail trade in Canada, Statistics Canada says that car sales in September were up 3.4 per cent to $10.5 billion. Car and truck sales over the last twelve months are up 8.1 per cent.
Strong profit growth was also seen in primary metal manufacturing, where profits rose 43.4 per cent to $1.1 billion, thanks to strong exports.
Industries that posted declining profits included food and soft drink manufacturers, down 9 per cent; computer and electronic products manufacturers, falling 39.7 per cent, largely because of increased operating expenses; oil and gas extraction, where profits fell 13 per cent as exploration costs rose while revenues fell; and machinery and equipment wholesalers, which saw profits decline 24.4 per cent.
Retailers also saw profits rebound after several consecutive quarters of declines. Operating profits in the retail sector rose 37.5 per cent to $4 billion, “almost entirely” due to food and beverage stores. Profits in that sector rose to $730 million after a second quarter loss of $204 million. Canadian consumers also bought more furniture, home furnishings and appliances, though sales of general merchandise, clothing and accessories declined. Gas sales were down as well, due to lower prices at the pump.