THE PANDEMIC

But ’s earnings spike was preceded by corporate profit declines in (down . per cent) and in (down . per cent).

B.C.’s top most profitable companies also generated significant earnings during . Earnings jumped  .  per cent compared with , according to data collected on Business in Vancouver’s list of the most profitable companies in the province ( BIV issue   ; November - ).

But profits for the top had dropped per cent in .

Nationally, resources industries have been the prime drivers of corporate profit growth.

Finance and resource

companies made up half of B.C.’s most profitable companies list in . Retail and tech companies were the next most represented industries on the list. The most profitable company in B.C. last year was West Fraser Timber Co. Ltd. (TSX:WFG) followed by Teck Resources Ltd. (TSX:TECK.B).

According to Canadian Centre for Policy Alternatives data, Canada’s oil and gas industry income jumped $ . billion in compared with the - average.

The country’s banks generated the second-highest profit bump. Their earnings were up $ . billion from the - average.

Aside from resources and finance, the retai l industry recorded the largest profit growth in compared with the prepandemic two-year average. Food and beverage profit increased

$ ” . billion while other retail was up by $ .• billion. However, not all sectors in Canada have generated profit increases in the pandemic economy. Industries experiencing the largest profit declines included real estate, pharmaceutical manufacturing and professional, scientific and technical services.

Trevor Tombe, an economics professor at the University of Calgary, said that profit margins in oil and gas, petroleum products and mining have roughly doubled over the past year. Russia’s invasion of Ukraine has also driven up prices for energy and agricultural products.

However, Tombe pointed out that when resource industries are taken out of the equation, profit margins have remained s tagnant and even dropped for some

industries.

He said that commodity prices have increased for a number of reasons, including the strong economic recovery from the COVID- pandemic through .

“That’s the story. The high levels of profit in those sectors are really because of global prices rises,” said Tombe. “So, naturally profits of firms that produce those items are going to increase as well.”

So where are these record pretax profits going?

In ’s second quarter, per cent were distributed as dividends and . per cent were retained as corporate savings, while  per cent went to taxes, according to Statistics Canada data.

In , •. per cent of corporate profits were distributed as dividends; taxes took . per cent, and . per cent went to corporate savings.

Tombe said that typically, when a market is functioning well, profits encourage new companies to enter the market and established businesses to expand.

However, these are not typical times.

Between the pandemic, ongoing global supply chain congestion and a looming recession, there is a lot of uncertainty.

Tombe said that uncertainty will reduce investment in sectors such as resources.

“Who knows were prices go from here,” he said. “Profits could remain elevated in these sectors if prices remain high [but] how long that lasts no one really knows.” ¥