Operating profits at Canadian corporations suffered the the largest quarterly decline in 16 years in the fourth quarter of 2008, Statistics Canada said Thursday.

Canadian corporations earned $65.4 billion in operating profits in the fourth quarter of 2008, down 16.3% from the third quarter, StatsCan said.

Declines were widespread as 16 of 22 industries reported lower profits.

Non-financial industries’ profits fell 14.4% to $49.5 billion while those in the financial industries declined 21.8% to $15.8 billion. Lower profits in the quarter were attributable to decreases in revenue as oil and gas extractors, depository credit intermediaries, and manufacturers led the decline.

Oil and gas extractors and refiners (petroleum and coal products manufacturers) earned less as both industries coped with declining oil and gas prices. Extractors’ profits dropped 41.2% from the previous quarter to $7.1 billion. Refiners’ profits retreated 47.3% to $2.3 billion, following double-digit growth during the two previous quarters.

Manufacturers’ earnings declined 16.7% to $10.5 billion in the fourth quarter, with much of the decrease coming from the petroleum and coal industry.

Chemicals, plastics and rubber products manufacturers’ earnings were off 8% to $1.9 billion, as fertilizer producers temporarily shut down plants in the quarter citing lower demand.

December plant shutdowns for motor vehicles and parts manufacturers were longer than normal, keeping operating profits down. These corporations posted a loss of $1.4 billion, their fourth consecutive quarterly loss.

Retailers earned $4.5 billion in the final quarter of 2008, down 3.2%, representing their first quarterly decline in nearly three years. Declines were partly due to motor vehicle and parts dealers as they coped with slowing sales.

Losses from trading in financial instruments caused banks to lead declines in the financial industries. Banking and other depository credit intermediaries earned $3.8 billion, down 35.5% from the third quarter.

Despite the declines in the fourth quarter, corporations earned $283.6 billion in 2008, up 5.4% from 2007. Much of the growth came from oil and gas extraction (up 43.2% to $37.8 billion) and petroleum and coal manufacturers (up 17.9% to $13.7 billion), as oil and gas prices were high in the first half of the year.

Meanwhile, banking and depository credit intermediaries dragged down financials as amounts set aside for future losses on investments, loans and other assets more than doubled in 2008. Banks registered profits of $22.4 billion, down 20.2% from 2007.

IE