The total value of corporate earnings edged lower for companies on this year's BIV list of the top 100 most profitable companies in B.C. But profit margins edged up for five of the nine sectors represented this year.
Sectors ranging from manufacturing and retail to financial institutions, technology firms and service businesses posted increases. This year's list differs from previous years by including provincial and federal Crown corporations operating in B.C. The margin increases were relatively modest. They hovered between 1% and 2% for the more profitable sectors but helped offset the more significant declines in the resource sector.
Total combined profits for the 29 most profitable mining companies edged lower to $6.8 billion from $26 billion in overall revenue compared with net earnings of $7.5 billion from $26 billion in combined revenue.
The decreases were primarily the result of the decline in commodity prices that began in 2011 and have continued for the key commodities produced by the B.C.-based companies represented on the list.
According to Scotiabank's latest commodity price index, prices continued to decline in September. Scotiabank's metal and mineral index posted the sharpest year-over-year decline in September, led by concerns at the time that the US Federal Reserve would begin tapering its monetary policy of quantitative easing, which involves the monthly purchase of $85 billion worth of U.S. government bonds and mortgage-backed securities.
Precious metal producers will likely see further erosion in their profits this year, although copper producers might outperform expectations.
B.C.'s most profitable forestry companies faced some downward pressure on earnings last year, but they are reaping rewards from a strengthening market in the U.S. Scotiabank's report said the forest product index was the only subcomponent of the commodity index to rise in September, with lumber prices rising to US$359 per thousand board feet (mfbm). Mohr expects lumber prices to rise further in 2014 to between $380 and $390 mfbm. •
