Severe weather, higher expenses, and market disruptions led to a $4.1bn drop in Q3 corporate earnings
Statistics Canada reported that Canadian corporations experienced a $4.1bn (2.5 percent) decrease in net income before taxes (NIBT) in the third quarter, reaching $157.4bn.
Both the financial and non-financial sectors saw declines, with decreases of 5.5 percent and 1.3 percent, respectively.
NIBT for the financial sector fell by $2.6bn, bringing the total to $44.8bn. Declines were recorded in 10 out of 13 financial industries.
The property and casualty insurance industry reported a $1.7bn drop in NIBT, driven by increased claim expenses from severe weather events such as wildfires in Jasper, Alberta, and floods in Ontario and Quebec.
Life, health, and medical insurance carriers recorded a $1bn decline, mainly due to rising expenses related to actuarial liabilities.
Partially offsetting these losses, the banking and depository credit intermediation industry saw a $651m increase in NIBT, attributed in part to higher net interest income.
The non-financial sector also experienced a decline, with NIBT down by $1.5bn to $112.6bn. This decline was evident in 17 of the 39 non-financial industries.
The telecommunications industry contributed the most to the non-financial sector’s decline, with a $1.8bn drop in NIBT. This decrease was linked to higher impairment charges due to reduced advertising demand in television and radio markets.
The mining and quarrying (excluding oil and gas) industry saw a $1.6bn decrease in NIBT. This decline was driven by increased impairment charges, challenging market conditions, operational disruptions, and a $1.0bn drop in operating revenue.
The pipeline industry recorded a $785m decrease in NIBT, primarily due to lower non-operating revenues after significant asset disposition gains were posted in the second quarter of 2024.
In the motor vehicle and trailer manufacturing industry, NIBT fell by $589m. Operating revenue declined by $1.7bn, driven by reduced shipments at assembly plants undergoing retooling and weaker demand for motor vehicles. A drop in motor vehicle and parts exports also contributed to the decline.
However, the oil and gas extraction industry mitigated some losses, recording an $861m increase in NIBT due to higher export volumes of oil and gas.
Additionally, Statistics Canada reported that the petroleum and coal products manufacturing industry experienced a $404m rise in NIBT, driven by increased exports of refined petroleum products during the quarter.
