Statscan - Lower revenues contributed to declines in profits as Canadian corporations reported operating profits of $55.1 billion in the first quarter of 2009, down 11.8% from the prior quarter. Declines were prevalent across the economy as 18 of 22 industries reported lower profits.

Profits in the non-financial industries fell 12.6% to $41.0 billion, while profits in the financial industries contracted 9.3% to $14.1 billion. Similar to the fourth quarter of 2008, lower profits were mainly attributable to oil and gas extractors and manufacturers.

Oil and gas extractors and refiners post second consecutive decline

Oil and gas extractors and refiners (petroleum and coal products manufacturers) earned lower profits for the second consecutive quarter, as both industries posted declines. Oil and gas extractors earned $4.3 billion in operating profits, down 33.5% from the fourth quarter of 2008. Petroleum and coal products manufacturers' profits also decreased, down 24.4% to $1.8 billion.

Manufacturing profits decrease on reduced demand

Manufacturers earned $8.0 billion in operating profits in the first quarter, down 15.1% from the previous quarter, with the bulk of the decrease coming from the petroleum and coal industry.

Motor vehicle and parts manufacturers reported an operating loss of $1.8 billion. This was down $401 million, or 28.2%, from the previous quarter. Plant shutdowns in response to lower consumer demand factored in the declines.

Weaker demand for steel and aluminium also led to lower profits for primary metal manufacturers, as operating profits fell 29.9% to $666 million.

Wood and paper manufacturers registered an operating loss of $177 million, as the industry continued to cope with lower demand for lumber and newsprint.

Moderately offsetting losses in the sector were computer and electronic product manufacturers, which posted profits of $1.3 billion, up 11.1% from the previous quarter, and chemical, plastics and rubber producers, which earned $2.0 billion in operating profits, up 6.4%.

Mining profits down on potash sales

Lower prices and reduced demand for potash and base metals prompted layoffs in the mining sector, as profits in the industry fell 25.8% to $1.9 billion.

Profits slow in transportation and warehousing

Transportation and warehousing profits decreased 16.1% to $2.7 billion, which was consistent with the lower activity reported in the Monthly Survey of Railway Carloadings for January and February.

Insurance carriers lead declines in financial industries

Insurance carriers led the financial industries to a 9.3% decline in operating profits. Specifically, life, health and medical insurance carriers reported higher claims as well as losses on the sale of securities and other assets, as profits in the quarter fell 56.5% to $618 million.

Note to readers

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.

The quarterly financial statistics for enterprises for the period covering 2006 to date have been revised following reconciliation to the 2006 and 2007 annual series. Seasonally adjusted data have been revised back to 1988 to reflect the introduction of the X12 ARIMA process.