By Richard Chu
The Great Recession continues to cast a long shadow over B.C.’s economy. While many of the province’s largest companies continue to recover from the shocks of the financial crisis, the recovery has neither been as swift nor as uniform across the province’s diverse corporate landscape as many might have hoped.
Overall, this year’s list of top 100 private companies in B.C. had a modest increase in revenue in 2010. Combined revenue of the list rose 1.7% to $59 billion, up from $58 billion in 2009.
By industry, much of the growth can be found in the financial sector. B.C.’s credit unions, for example, posted a new record in profits for the co-operative financial system. Profits for the province’s 45 credit unions rose 29.6% to $380.4 million, up from the previous record in 2009 of $293.6 million. (See story, page 21)
B.C.’s largest credit unions contributed to much of that growth. The nine credit unions on this year’s Top 100 list collectively posted a 33.4% year-over-year increase in profit in 2010 to $234.5 million from a 17% increase in revenue to $1.4 billion.
For most financial institutions, rising interest rates that led to a 75-basis point increase in the prime lending rate last summer contributed to their record performance. Those increases helped boost margins on most variable-rate lending products, primarily in mortgages.
Other financial companies reporting significant growth last year included Raymond James Ltd., which posted a 23.6% increase in revenue to $265.7 million, and Industrial Alliance Pacific Insurance, which posted 17.9% revenue growth to $927.3 million, making them among the fastest growing companies year-over-year.
Besides the finance sector, however, revenue growth remained relatively flat for other sectors. B.C.’s largest auto dealers, manufacturers and retail companies, collectively posted flat revenue between 2009 and 2010.
But while top-line revenue growth may be hard to find, that didn’t mean B.C.’s private companies simply stayed with the status quo. B.C.’s corporate landscape continued to grow and evolve last year, with several companies completing merger and acquisition deals. Among companies that grew by acquisition was Burnaby’s Golden Boy Foods, which expanded through its acquisition of Markham, Ontario-based Nutco, which produces private-label peanut butter for Canadian, U.S. and international markets.
Other big deals last year included Dollar Giant’s sale to Cheasapeake, Virginia-based based Dollar Tree for $62 million, giving the U.S. Fortune 500 company a foothold in the Canadian market. Earlier this year, Britco Structures became a subsidiary of Vancouver’s WesternOne Equity Income Fund (TSX:WEQ.UN), in a $93 million deal that closed in early June.
For some of B.C.’s dominant private companies, the need to stay fresh and innovative continues to be a key to their success. At this year’s conference by the Vancouver chapter of the Association for Corporate Growth (ACG Vancouver), Karen Flavelle, CEO of Purdy’s Chocolates, noted the importance of knowing when to bring in fresh new ideas and energy, especially in a business that has been around for a long time.
In the case of Purdy’s, which was founded more than a hundred years ago, Flavelle’s focus is to keep the company’s brand relevant to its customer-base that spans generations.
“We need to continually hone Purdy’s image,” said Flavelle. “We never want to be ‘your grandmother’s chocolate.’ That’s something we’ve heard for years for Laura Secord, and so our effort is to continue to be relevant in graphics, design and how we position ourselves in the market.”
Key to that is ensuring its operations and sales processes continue to evolve and become more effective. This includes bringing in new people at the right time, especially for a family business.
“Being a family business, it tends to mean that the leader of a company is in place for a long time, and I’ve seen the charts of companies that have had the same leader for 20 to 30 years, and it’s not a pretty sight because the performance of the company starts to decline over time. So, I’ve been careful to bring in new people.”
Knowing what’s fundamental for a company to grow is also key. For Kari Yuers of Kryton International, having capable staff and a steady stream of new products that fill its customers’ needs have remained vital for the company’s double-digit growth over the years.
But even more fundamental is having sound financial management for the company her father founded. “A powerful lesson I’ve learned over the past 20 years is that revenue is vanity, profit is sanity, and cash flow is, in fact, reality. I’ve been mindful how important it is to have cash. It pays dividends with regards to being able to do what may seem like a risky thing. But when it works out, you’re a hero.”
1.7% rise in combined revenue of the Top 100 list from 2009
$59 billion: combined revenue of the Top 100 list
29.6% rise in profits of B.C.’s 45 credit unions
$234.5 million: profits of nine credit unions on the Top 100 list