OTTAWA, Nov. 24, 2011 /CNW/ - An uncertain economic environment will
restrain growth in Canadian industries that rely on consumer
willingness to open their wallets, according to the Canadian Industrial Profile-Autumn 2011. Published by The Conference Board of Canada in association with the
Business Development Bank of Canada (BDC), the Canadian Industrial
Profile provides a five-year (2011-2015) production, revenue, cost and
profitability forecast for six industries each quarter.
"Several industries profiled in this outlook have recovered from the
2008-09 recession. But the prospects for continued growth are muted
because of weak consumer and business confidence, as well as high
household debt levels," said Michael Burt, Associate Director,
Industrial Economic Trends.
Worrisome economic news has caused many consumers and businesses to
rethink their traveling plans. As well, some Canadians are taking
advantage of the strong dollar to travel abroad. Meanwhile, weak
international travel to Canada also poses a challenge to the industry's
outlook. After a strong rebound in 2010, profits are expected to weaken
to about $750 million this year and stagnate in 2012.
Food and Beverage
Higher industry prices are largely responsible for a 15 per cent
increase in profitability among food manufacturers this year. However,
cost pressures - including the effects of higher agricultural and
energy prices - are expected to limit profit growth through 2015.
Nevertheless, the industry's fundamentals remain sound, supported by
population and income growth in the medium term.
Comprised primarily of restaurants and catering services, the industry
is on track for a profit of $1.6 billion in 2011, its best performance
on record. But high household debt levels and consumers' concerns about
the economic outlook are expected to limit growth. In the medium term,
the industry should enjoy a modest but steady increase in revenues.
Costs will be a challenge to manage as the highly-competitive nature of
the industry provides little room for businesses to absorb cost
increases. In particular, rising food prices will be a concern, but the
industry will maintain its profit margins.
Several factors will lead to slower retail sales growth and a decline in
profitability this year. In particular, Canadians are expected to delay
big-ticket and discretionary purchases until their personal and
household finances improve. Industry profits are forecast to climb back
above $12 billion in 2012 (offsetting most of the decline this year)
and post steady growth in sales, revenues and profitability thereafter.
Transportation and Warehousing
Rising labour and operating costs will lower profits to less than $5
billion this year. While the industry as a whole has recovered from the
recession, the rebound varies among the different modes of transport.
The trucking, air transportation and rail segments have posted strong
growth, and the pipeline transportation segment is forecast to record
its first increase in output in five years. However, the ongoing
economic weakness in the United States is limiting demand for water
The wholesale trade industry is expected to post its second consecutive
year of growth in revenues and profits. Sales have surpassed
pre-recession levels and industry profits are forecast to exceed $20
billion this year. Nevertheless, business and consumer confidence have
weakened, which may have a negative effect on sales in the short term.
The Canadian Industrial Profile Service is part of The Conference Board
of Canada's Industrial Economic Trends research. In all, outlooks for 23 industries are completed each year.
The publications are available at www.e-library.ca. BDC clients who wish to receive a copy of the profiles free of charge
can contact their BDC account manager.
Canada's business development bank, BDC, puts entrepreneurs first. With
almost 1,900 employees and more than 100 business centres across the
country, BDC offers financing, subordinate financing, venture capital and consulting services to 29,000 small and medium-sized companies. Their success is vital to
Canada's economic prosperity. For more information, visit www.bdc.ca.
SOURCE CONFERENCE BOARD OF CANADA
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