First quarter Canadian corporate earnings are expected to take a pounding, led by a plunge in energy sector profits, according to a new report from National Bank Financial (NBF).
NBF reports that estimates of first quarter net income for the constituents of the S&P/TSX Composite index are down 20.0% from the fourth quarter of 2014.
Energy is by far the biggest culprit, with a forecast decline in earnings of 84.2%, followed by materials at 29.7% and utilities, 20.6%.
Conversely, profits for the industrial sector are expected to rise by 38.0%, consumer staples are forecast to gain 34.4%, and health care companies are seen gaining 33.1%. Overall, seven of 10 broad sectors are expected to record an increase in net income, compared to the same quarter in 2014. Excluding the energy sector, profits for the rest of the index are seen gaining 6.3% in the quarter.
NBF also reports that the estimate for S&P/TSX Composite index sales/revenue for the quarter is for a decline of 3.4%, again led by energy and utilities, and offset by the consumer staples, industrials and health care sectors. Six of 10 sectors are expected to record an increase in sales/revenue when compared to the same quarter in 2014; and, excluding energy, expectations are for a modest increase in revenues.
Overall, profit margins for the quarter are 8.0%, which represents a decline compared to last year’s 9.7%, the report notes, with energy and materials weighing on margins. Excluding energy, margins are expected to be 9.7%.