While top-line revenues rose to new heights in 2012, corporate profits edged down for B.C.’s largest public companies.
Total profit from the list of top 100 public companies in B.C. fell 14% to $8 billion from a record $9.33 billion in 2011.
The bulk of the profit came from five of the top six companies on the list. The company with the biggest profit increase was First Quantum Minerals (TSX:FM), which saw profits double last year to $1.9 billion from $647.6 million in 2011.
Profits edged up for Telus (TSX:T) to $1.3 billion, surpassing its previous record profit of $1.26 billion set in 2007.
Despite a record rise in gold prices, annual net profit at Goldcorp (TSX:G) fell 6% to $1.7 billion.
The biggest annual drop in profit among B.C.’s largest companies was Teck’s 68% drop to $870 million from a record $2.8 billion in 2011.
But smaller companies in B.C. have seen substantial profit growth over the past year. Norsat International (TSX:NII), for example, saw profits recover from a disappointing 2011 and net income nearly triple for Partners REIT (TSX:PAR.UN).
Stocks for mining companies across the exploration/production spectrum in B.C. have been hit by the investor shift away from the commodity market.
Nolan Watson, president and CEO at Sandstorm Gold (TSX:SSL) noted that many pension funds that had allocated a certain amount of capital to the commodity markets have reallocated their money given the downturn the industry is facing. It’s gotten to the point that even if pension funds wanted to invest in the sector, they no longer have the capital to do so.
But the market may be approaching a bottom that would lure some investors back to the struggling sector. “There are a lot of generalist investors that are looking for cash flow and gold entities specifically,” said Watson. “When they think the gold industry is going to hit the bottom, they’re going to jump in with two feet. They’re just waiting for that moment.”
