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By Steve Williams CExP™, CMMA
What is the Top Industry in Canada? A new report reveals which category of Canada’s economy are the most profitable and which are not.
Canada’s diverse economic landscape is an interplay of industries, each contributing to the nation’s growth and development. From the heart of bustling cities to the tranquil countryside, various sectors shape the fabric of the economy – but which should business leaders focus on when looking at acquisition and growth.
In this blog post, we’ll delve into a key factor when considering acquisition targets or new areas for growth – industry profitability. Specifically, the top five most profitable industries and the five least profitable industries in Canada. Whether you’re an M&A investor seeking the next acquisition or a business planner looking for vertical or horizontal opportunities, this guide is designed to provide you with valuable insights.
In This Article:
Top 5 Most Profitable Industries in Canada (non-financial)
According to a new report from 1Statistics Canada July 27, 2023, these as the most profitable industries in Canada.
#1 Oil and Gas Extraction and Support Services
The extraction of oil and gas, combined with the support services that sustain these operations, forms a cornerstone of the country’s economy. Provinces like Alberta have become synonymous with energy production, attracting investment and contributing significantly to GDP. Despite environmentalist challenges, technological advancements and responsible practices continue to drive profitability in this sector. An example of profit margin in the Oil and Gas Extraction Industry in Canada, 2IBISWorld reported 10.7% profit margin in 2023 from the industry sub-category Oil & Gas Field Services.
#2 Mining and Quarrying (Except Oil and Gas) and Support Activities
The mining and quarrying industry is another pillar of Canada’s industries profile. Abundant mineral deposits have fueled the growth of this sector, with provinces like Ontario and Quebec leading the charge. From precious metals to industrial minerals, Canada’s mines supply global markets, and the support activities that accompany these operations contribute to economic growth. An example of profit margin in the Mining and Quarrying Industry in Canada, profit margin in 2023 from the industry sub-category Gold & Silver Ore Mining is 24.8%2.
#3 Petroleum and Coal Product Manufacturing
Canada’s prowess in the production of petroleum and coal products adds another layer to its economic tapestry. Refineries and manufacturing facilities across the nation transform raw materials into valuable products used in various industries. While the sector faces environmental scrutiny, ongoing technological advancements and a commitment to sustainability are reshaping its profitability trajectory. Profit margin from the industry sub-category Petroleum Refining is 9.2% in 20232.
#4 Transportation, Postal, and Courier Services, with Support Activities for Transportation:
As a vast country with a complex logistics network, transportation and related services are crucial to Canada’s economy. From shipping goods to connecting communities, this industry contributes significantly to economic activity. The combination of postal services, courier operations, and support activities ensures that goods and information flow smoothly across the nation. Profit margin from the industry sub-category Rail Transportation in Canada is 25.5% in 20232.
#5 Pipelines
Pipelines form an integral part of Canada’s energy infrastructure, facilitating the efficient transportation of oil, gas, and other resources. While the industry is not without controversies, it remains a profitable sector due to its crucial role in connecting production centers to end-users. The transportation of resources through pipelines reduces costs and ensures a stable supply to domestic and international markets. Profit margin from the industry sub-category Natural Gas Distribution in Canada is 14.0% in 20232.
Least Profitable Industries
According to the same report from Statistics Canada1. It listed the least profitable industries in Canada as:
#1 Alcohol Beverage, Tobacco, and Cannabis Product Manufacturing
While the alcohol and tobacco industries have been long-standing contributors to the economy, the profitability of these sectors has faced challenges due to changing consumer preferences and increasing health concerns and some sub-sectors oversupply. The addition of cannabis as a legal product has introduced new opportunities, but regulatory complexities and market saturation can impact profitability.
#2 Agriculture, Forestry, Fishing, and Hunting
Despite being a vital part of Canada’s heritage, the agriculture, forestry, fishing, and hunting industries have encountered profitability challenges. Fluctuations in commodity prices, climate-related uncertainties, and rising operational costs can impact the bottom line for those engaged in these sectors. However, ongoing innovation and sustainable practices are transforming the landscape.
#3 Publishing, Motion Picture, Sound Recording, Broadcasting, and Information Services
The digital revolution has significantly altered the landscape for industries related to publishing, media, and information services. Traditional models have struggled to adapt to the rise of online platforms, leading to revenue challenges. While digital distribution offers new avenues for exposure, monetization remains a hurdle for many.
#4 Motor Vehicle and Trailer Manufacturing
The motor vehicle and trailer manufacturing industry has faced its share of challenges in Canada. International competition, shifts in consumer preferences, and technological disruptions have affected profitability. However, advancements in fuel efficiencies and autonomous vehicles could provide opportunities for revival and growth in the future.
#5 Basic Chemical Manufacturing
The basic chemical manufacturing industry has encountered profitability challenges due to factors such as global competition and environmental regulations. However, this sector is undergoing transformation as it explores sustainable and innovative solutions. The demand for eco-friendly products and technologies could drive growth and reshape the industry’s profitability outlook.
The Top Industry in Canada?
Canada’s economic landscape is a dynamic mosaic of flourishing industries and those grappling with challenges. While sectors like oil and gas, mining, and transportation continue to offer reduced risk for investment and growth capital, others like agriculture and publishing navigate evolving trends. Understanding industry profits is vital for investors and business planners alike, as focusing on the most profitable industries can help de-risk investment and strategic focus.
