Canada’s top 10 most profitable Canadian companies lost $2.6 billion in the fourth quarter, a sharp fall from the previous quarter, as they struggled to stem a global recession that has crimped their profits.
The total loss was $1.4 billion more than analysts expected, and more than double the previous record loss in the first quarter.
“This was the first time that we have had such a large year-over-year decline,” said Robert Kavcic, president of the Toronto-based consultancy Avalara Group.
“The fact that the number of days of bad weather and cold conditions was so large makes it difficult to predict how much it will continue to affect the company.”
The Canadian Association of Petroleum Producers and Natural Resources (CAPP) said the drop was particularly concerning because Canada’s oil production is among the world’s most competitive, with oil at $42.6-per-barrel and natural gas at $1-per.
The industry’s revenue, meanwhile, is down by nearly 20 per cent over the past year.
In a statement, the company said it is “concerned” about the “significant impact” of the weather, but that it expects “significant” recovery.
“Our industry is experiencing significant uncertainty due to a variety of factors, including low commodity prices, weak demand and volatile geopolitical conditions,” said CAPP president and CEO Peter MacKay.
“As we move towards the end of the year, we are focusing on our key priorities to maintain our competitive position and strengthen our position as a leader in the global energy marketplace.”
For example, the Alberta Energy Regulator, the government body that oversees oil and gas production, announced earlier this month that it was suspending its review of the industry.
The regulator said it will not release its final report until the end to coincide with the federal government’s energy policy review.
That review will consider the effects of new regulations on the industry and will look at how best to improve conditions.
“I think we are in a very tough situation,” said MacKay, who said he believes that the industry will return to profitability as the country reels from a recession that is expected to last for months.
“We have to continue to do the best we can to keep our lights on, to maintain a healthy balance of production and prices.”
The Alberta government’s Energy Minister said the province is also looking at how to help ensure supply meets demand and has ordered a review of energy pipelines.
“It is a very challenging situation, and we are going to do everything we can as we look to make sure that we do all we can for the safety and security of the people of Alberta,” said Premier Rachel Notley.
“But as the government continues to work through that, I know we will be seeing some positive signs of that as well.”
The province also plans to increase the number and frequency of oil inspections to ensure that companies are operating in accordance with their own policies and regulations.
And the province has asked the U.S. Department of Energy to review whether it has been effective in reducing carbon emissions from oil and natural-gas production.
“These are critical and important steps to take as we continue to recover from this historic downturn,” said Notley, adding that the province will also be releasing a plan to protect the environment and ensure Canadians can enjoy the benefits of our natural resources.
In Canada, companies such as Suncor Energy Inc. are seeing their profit margins collapse and are reporting massive cash burn.
Last month, Suncor said it reported a $1 billion loss, down from $6 billion a year earlier.
The company’s Canadian operations are also in trouble.
Suncor announced this week that it has decided to sell its oil sands production and that it plans to spend $1 million to help it find new oil-sands resources.
Sun Canada is one of a number of Canadian companies that have been hit by lower oil prices as the global recession has forced the industry to lay off hundreds of thousands of workers.
The Canadian Federation of Independent Businesses (CFIB) said that its membership is down 15 per cent in the last year.
It’s unclear how many of those layoffs were related to the downturn.
“While the downturn has hurt our business and hurt our members, there is no question that it’s been devastating for the country’s economy,” said CFIB President and CEO Mike Moffatt.
The federal government, which has been pushing for energy efficiency and renewable energy targets, said it’s working on measures to help the industry, including a carbon tax, which would apply to all energy products. “
Even though our members are hurting, they’re hurting because they’re being hit hard.”
The federal government, which has been pushing for energy efficiency and renewable energy targets, said it’s working on measures to help the industry, including a carbon tax, which would apply to all energy products.
“One of the biggest challenges for the energy sector is that we are now seeing a very significant decline in the supply of fossil fuels,” said Peter Mansbridge, president and chief executive of the Canadian Association for