Canada's corporate elite have emerged from the dark shadows of recession into a sunnier landscape awash in higher profits and restored performance bonuses. But most CEOs won't be throwing lavish parties to celebrate their deliverance from the epic financial and economic horrors that laid waste to large swaths of the economy during the Great Meltdown of 2008 and 2009. They still have a lot of ground to make up. And every new gloomy report on Chinese manufacturing, European debt, the U.S. housing market or inflation in the emerging world serves as a reminder of the ever-present risks to the still-fragile global recovery on which they have become increasingly dependent.
The country's 1,000 largest publicly listed companies racked up an impressive $100.5 billion in total earnings in 2010, nearly double the dismal tally of the previous year and the highest since 2007, when the U.S. housing bubble burst, triggering massive derivatives writedowns, an unprecedented global credit crunch and the worst economic slump since the Great Depression. But the score still falls well short of the record $109.9 billion chalked up in 2006. Looking at the entire universe of public and privately held corporations (including data beyond the Top 1000), total Canadian profits still languish 24% below their pre-recession level, while cash flow remains about 15% lower.
Still, after you survive a fall off a steep cliff-profits plunged about 45% in less than a year-even a modest climb back toward the high ground starts looking good. Firms across a broad economic spectrum posted gains in double and sometimes triple digits. No fewer than 27 companies in our annual Top 1000 ranking scored four-digit increases. It could be that they hired better accountants. But the more likely reason was an ability to capitalize, either directly or indirectly, on surging world resource prices, a historically low cost of capital and the determined efforts of Canadian consumers, who apparently didn't get the message that they were supposed to be reducing household debt and steering clear of homes they couldn't afford. "The real story this year is a rising tide lifts all boats," says Arthur Heinmaa, managing partner with Toron Investment Management in Toronto. "Everybody has done really well."
Well, not quite everybody. More than 40% of companies on our list brought home lower profits last year, in some cases dramatically lower. The Biggest Losers club includes such corporate icons as Manulife Financial, which plummeted all the way to 997th from 18th (don't mention U.S. variable annuities if you're visiting their offices), and Onex Corp., which slid to 953rd from 113th (don't worry, they won't need any tag days). Bell Aliant, which does a big chunk of its telecom-related business in the troubled eastern part of the country, had the dubious distinction of finishing dead last, a precipitous drop from 59th the previous year.
But let's leave the intensive-care ward and get back to where the money is once again pouring in. As our latest ranking underscores, Canada's traditional spinners of wealth-the big financial players and major resource producers-continue to rule. Indeed, these powerhouses have become more dominant than ever, thanks to healthier margins, an abundance of cheap financing and China's insatiable demand for base metals, crude oil and just about everything else we can dig or pump out of the ground. Mining and oil and gas producers accounted for more than a quarter of total profit chalked up by all the companies on our list, and about a fifth of total revenue. Oil and gas alone delivered a 16.5% slice of Canada's profit pie, up from just under 13% in 2009. And a sustained rise in prices, whether through actual global shortages or fears of supply disruptions elsewhere in the world, could result in a substantially better showing this year.