Manufacturing profits hammered in second quarter while oil & gas saw rise
Ottawa - Canadian corporations earned $72.2 billion in operating profits in the second quarter of 2013, down 0.8% from the previous quarter, reports Statistics Canada. This decline followed a 2.8% decrease in the first quarter. Overall,...
Ottawa – Canadian corporations earned $72.2 billion in operating profits in the second quarter of 2013, down 0.8% from the previous quarter, reports Statistics Canada. This decline followed a 2.8% decrease in the first quarter. Overall, operating profits were down in 10 of 22 industries.
In the non-financial sector, operating profits fell 3.9% to $51.1 billion in the second quarter, following a 0.5% decrease the previous quarter. Manufacturing industries led the decline with a 16.6% drop to $9.9 billion.
In the financial sector, operating profits increased by 7.6% to $21.1 billion in the second quarter, following an 8.5% decline in the first quarter. Most of the gain in the second quarter came from life, health and medical insurance carriers.
On a year-over-year basis, operating profits for Canadian corporations increased 1.4% compared with the second quarter of 2012. Profits fell 1.4% in the non-financial sector and rose 9.1% in the financial sector.
Operating profits in manufacturing fell for the third consecutive quarter, down 16.6% to $9.9 billion in the second quarter.
Overall, 8 of 13 manufacturing industries reported declines.
Operating profits for petroleum and coals products manufacturing led the decline, falling 49.2% to $1.6 billion in the second quarter. Profits fell because of a variety of factors, including maintenance downtime, pipeline outages and lower industry margins.
Primary metal manufacturing profits fell by two-thirds (-66.6%) to $126 million in the second quarter, while chemical, plastics and rubber products manufacturing profits rose 5.1% to $2.5 billion.
In other sectors, operating profits in construction were down 8.8% to $3.8 billion.
Real estate and rental and leasing profits fell 7.0% to $4.4 billion.
Profits in transportation and warehousing declined 5.8% to $3.5 billion.
Wholesalers’ profits fell 3.5% to $5.7 billion in the second quarter. This was mainly the result of a 9.1% reduction in operating profits for other wholesalers-distributors, such as distribution centres. These businesses, which support and supply retail operations, saw operating profits fall to $2.0 billion. Retailers’ profits increased 1.5% to $4.0 billion, with “other retailers” leading the gain in the second quarter.
Oil and gas extraction and support activities profits rose by 49.2% to $1.9 billion. This increase was spurred on by strong sales, while expenses were stable.
Following the first quarterly decline in four quarters, operating profits in the financial sector bounced back in second quarter, rising 7.6% to $21.1 billion.
An increase of $776 million by life, health and medical insurance carriers accounted for more than half of the gain in operating profits in the financial sector.
Banking and other depository credit intermediation profits increased 2.9% to $8.8 billion in the second quarter, while securities, commodity contracts, and other financial investment and related activities rose 4.3% to $5.7 billion.
Flooding in Alberta occurred near the end of the quarter, so the full effect of any claims were not seen on the financial statements reported by property and casualty insurance carriers in the second quarter. Even so, their operating profits fell by 1.3% to $1.4 billion.