Canadian Electrical Wholesaler

Dec 31, 2018

Economy WholesaleThe operating revenue of Canadian wholesalers increased 10.4% in 2017, topping the $1.0 trillion mark, which was last reached in 2014. The increase was led by the petroleum products subsector, but all other subsectors also reported higher revenue. Excluding petroleum products, operating revenue increased 5.5% compared with 2016.


Overall, the operating profits of wholesalers as a percentage of total operating revenue edged down from 4.8% in 2016 to 4.6% in 2017, as increases in operating revenue were offset by higher operating expenses and the cost of goods sold.

The cost of goods sold, which accounted for 83.5% of total operating revenue, increased 11.5% to $881.1 billion in 2017. This was driven by growth in the cost of goods sold in the petroleum subsector, which rose 27.2% from 2016 to $264.2 billion in 2017. During that time, the Raw Materials Price Index for conventional crude oil rose 19.4% and Canadian crude oil production increased 7.7%, as the petroleum industry recovered from the impact of the forest fires in Fort McMurray.

Total operating expenses, which include labour remuneration, were up 4.3% to $124.9 billion. Total operating expenses were up in all subsectors except petroleum products, where they were down 13.5% to $4.4 billion.


Gross margins for wholesalers—the difference between total operating revenue and the cost of goods sold expressed as a percentage of total operating revenue—decreased from 17.3% in 2016 to 16.5% in 2017. The growing share of petroleum in the sector was behind the decrease in overall gross margins, as the petroleum product subsector had the lowest gross margins in the wholesale sector at 3.4% in 2017. Excluding petroleum products, wholesale gross margins were 21.1% in 2017.


Wholesale revenue up across the board


The largest increase in operating revenue was in the petroleum products subsector, up 27.3% to $273.4 billion in 2017 as a result of higher oil prices and the recovery from the Fort McMurray forest fires.


Wholesalers of petroleum products accounted for the largest proportion of operating revenue in the wholesale trade sector in 2017 with 25.9% of total operating revenue, up from 22.5% in 2016.


In dollar terms, the second largest increase in revenue was in the machinery, equipment and supplies subsector, up 7.2% to $149.9 billion in 2017. All four industries in this subsector reported increases in operating revenue, led by the other machinery, equipment and supplies industry, up 11.0% to $37.0 billion. The construction, forestry, mining, and industrial machinery, equipment and supplies merchant wholesalers industry also contributed significantly, with revenues increasing 7.3% to $46.9 billion in 2017.

Gross margins of wholesalers fall

Expressed as a percentage of total operating revenue, gross margins fell from 17.3% in 2016 to 16.5% in 2017. Lower gross margins were reported by five of the nine subsectors.

Gross margins varied widely among the subsectors, depending on the cost structure of the different types of wholesalers. The lowest gross margin among wholesale merchants was posted by wholesalers of petroleum products (3.4%). The highest margins were in the machinery, equipment and supplies (26.0%), and the personal and household goods (down from 25.3% in 2016 to 25.0% in 2017) subsectors.

The gross margins of motor vehicle and parts wholesalers declined from 14.6% in 2016 to 12.6% in 2017, led by lower margins in the motor vehicle (down from 11.2% in 2016 to 9.3% in 2017) and the new motor vehicle parts (down from 27.3% in 2016 to 25.3% in 2017) industries.

Operating profits edge down due to motor vehicles and parts

Overall, six of the nine subsectors posted annual increases in their operating profits as a percentage of total operating revenue, while operating profits edged down from 4.8% in 2016 to 4.6% in 2017.

Motor vehicle and parts wholesalers posted the largest decline in operating profits among wholesale merchants, falling from 4.8% in 2016 to 2.9% in 2017, as higher revenues were offset by increases in the cost of goods sold and operating expenses.

Wholesalers of petroleum products posted the largest increase in operating profits, up from 0.9% in 2016 to 1.7% in 2017.

Wholesale revenue up in most provinces

In 2017, nine provinces as well as Nunavut reported higher wholesale operating revenue compared with 2016. Overall, operating revenue in Canada increased by $99.6 billion in 2017. Growth was driven primarily by the two provinces with the greatest wholesale trade, with a $55.2 billion increase in operating revenue in Alberta and a $23.8 billion gain in Ontario.


Overall, wholesale operating revenue in Ontario remained higher than in Alberta, increasing 6.3% to $400.7 billion, as all subsectors posted increases from 2016 to 2017.
Wholesalers in Alberta reported a 22.8% annual increase in operating revenue to $297.7 billion in 2017. The increase was mainly attributable to the petroleum products subsector (+31.4%), which accounted for over 70% of the operating revenue of wholesalers in the province. Revenue increased in seven of nine wholesale subsectors in Alberta in 2017.
Wholesalers in Quebec posted the third highest provincial total operating revenue at $155.7 billion in 2017, up from $145.8 billion in 2016. Operating revenue was up in eight of nine wholesale subsectors in Quebec in 2017, led by petroleum products wholesalers (up 23.8% from 2016).
Operating profits in Quebec edged down from 5.0% in 2016 to 4.9% in 2017. The cost of goods sold by wholesalers in Quebec increased 7.5% from 2016 to $122.9 billion in 2017. Meanwhile, total operating expenses for Quebec wholesalers were up $1.0 billion to $25.1 billion in 2017.
Source: Statistics Canada, https://www150.statcan.gc.ca/n1/daily-quotidien/181219/dq181219c-eng.htm.

 

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Building owners, users, and manufacturers of control systems continuously work to find practical ways to create safe and more secure environments.

 

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When I talk to our customers, I do so with that experience and mindset. If we don’t deliver – we lose. Maybe not immediately, but eventually. It’s as simple as that.

I just lived through a great example of this. Every morning I use our blender. One of the parts broke, and the manufacturer made it quite difficult and cumbersome to get a replacement.

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