Canadian corporations saw a moderate rise in pre-tax earnings in the fourth quarter of 2024, as gains in the non-financial sector offset a slight downturn in the financial industry. The latest figures indicate that net income before taxes (NIBT) climbed to $164.5 billion, marking a 2.1 percent increase over the previous quarter.
The growth was largely propelled by the non-financial sector, which posted a 3.2 per cent gain, bringing its NIBT to $117.4 billion. The financial sector, however, experienced a marginal decline of 0.7 per cent, shedding $349 million to settle at $47.1 billion.
The non-financial sector’s performance was underpinned by improved earnings across 30 of the 39 industries tracked. Lower operational expenses played a significant role in driving profitability, particularly in telecommunications, manufacturing, and mining.
The telecommunications industry recorded a $1.6-billion increase in NIBT, rebounding from impairments in the prior quarter that stemmed from lower advertising revenues in television and radio markets. The recovery highlights renewed confidence in the sector despite ongoing shifts in media consumption patterns.
Automobile manufacturing also contributed to the sector’s gains, with NIBT in the motor vehicle and trailer manufacturing industry rising by $1.4 billion. Increased sales at auto assembly plants fueled the surge, reflecting stronger demand in both domestic and export markets.
Mining and quarrying (excluding oil and gas) saw an $837-million rise in earnings, supported by higher prices for metal ores and scrap, as well as lower expenses linked to reduced impairment charges. The industry had faced operational disruptions and challenging market conditions in the third quarter, making the latest uptick a notable turnaround.
Despite these gains, certain industries dampened the sector’s overall progress. The pharmaceutical and agricultural chemical manufacturing segment posted a $1.2-billion decline in NIBT, primarily due to a slowdown in sales of non-metallic minerals used in agricultural chemical production. Additionally, the petroleum and coal manufacturing sector recorded a $1.1-billion drop, as declining prices for refined petroleum products weighed on earnings. The oil and gas extraction industry also saw a contraction, with NIBT decreasing by $586 million due to weaker global demand for crude oil.
While the financial sector recorded an overall decline in earnings, performance varied among industries. The largest drop came from the banking and credit intermediation sector, which posted a $1.5-billion decline. This was attributed to asset sales losses and a rise in non-recurring expenses, highlighting some of the challenges facing financial institutions amid shifting economic conditions.
However, not all financial industries struggled. The securities and portfolio management segment provided a counterbalance, with earnings increasing by $2.0 billion, driven in part by stronger dividend and interest income. Similarly, the property and casualty insurance sector experienced a $531-million boost in NIBT, as lower claims expenses helped insurers recover from the financial impact of severe weather events in the third quarter.