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(February 22, 2007) Statistics Canada reports that Canadian corporations earned record-high operating profits of $231.7 billion in 2006, led by solid growth in the wholesale, retail and construction industries. The financial services industry, primarily chartered banks, also turned in a healthy profit.

StatsCan reports that, overall, operating profits increased 7.3% in 2006, down from double-digit growth in the previous two years. The big winners were retailers; increased consumer spending helped their profits grow by 20.2% over 2005, to reach a record level of $14.3 billion.

Wholesalers’ profits of $16.6 billion were up 15.1% over 2005. Despite recent woes in the auto industry, wholesalers of motor vehicles saw a profit growth of 39.5%. This is in stark contrast with auto manufacturers’ situations, though; their profits slid 14.8% to 1.5 billion dollars.

Financial services were not far behind retailers and wholesalers, StatsCan points out. Depository credit intermediaries led the way, with profits rising 14.3% to $26.4 billion in 2006, boosted by higher net interest income from growth in mortgage and non-mortgage loans such as credit cards and consumer and corporate loans. Profits also benefited from trading gains derived from equity markets and higher volumes in treasury and investment banking as well as in wealth management.

Insurance carriers didn’t do as well as the banks but still turned in a healthy $13.9 billion in operating profits in 2006, which was up 8.2% over 2005 levels. Specifically, life insurers saw profit gains of 5.9%, while property and casualty insurers almost doubled that with profit growth of 11.3%.

Profit growth in Canada slowed in the final quarter of 2006, particularly in the oil and gas industry, which was affected by the drop in oil prices. Banks, however, made gains, with profits of $7.2 billion, up from $6.9 billion in the third quarter.

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Criterion launches water industry fund

Criterion Investments Limited announced Thursday the launch of the Criterion Water Infrastructure Fund, which it said will be the first actively managed water fund for Canadian investors.

The fund will invest in a range of companies across multiple sectors of the global water industry, including water supply and treatment, water technology, environmental services and packaged water. The investing will be managed by Geneva-based Pictet Asset Management SA, which Criterion said is a leading European investment firm and manager of the world’s largest water-focused fund.

Criterion said part of the impetus for launching the fund is the fact that less than 1% of the world’s total water sources are usable and demand for water grows twice as fast as the world’s population. As well, water infrastructure in the developed world is in desperate need of repair; emerging markets such as China and India require new infrastructures. As a result, Criterion estimates up to $1 trillion must be spent over the next five years just to cover basic global water needs.

“The solution to the world’s water crisis begins with the outsourcing of key water services to the private sector,” said Dr. Phillipe Rohner, senior fund manager at Pictet. “This process already represents a $260 billion US market and is growing at 6% per annum. We are seeing tough new water directives and regulations worldwide that will continue to drive massive spending and ultimately the price of water.”

Criterion said the fund will aim to provide investors with global diversification, significant growth potential, enhanced risk-adjusted returns, as well as income in the form of a target yield of 5% per annum. Available as both a currency-hedged and un-hedged solution, the fund will be accessible through licensed financial advisors in all provinces across Canada.

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OSC names new vice-chairs

(February 22, 2007) Ontario Securities Commission chair David Wilson announced the appointments of Lawrence Ritchie and James Turner as vice-chairs to the OSC, effective February 22, 2007. Both appointments are for five years.

“Both Mr. Ritchie and Mr. Turner have outstanding reputations, extensive experience in securities law and a keen interest in policy development,” said Wilson.

Lawrence Ritchie, a former partner in Osler, Hoskin & Harcourt, has 20 years’ experience specializing in general corporate, securities and commercial litigation. In addition, he has experience in alternative dispute resolution and pensions.

Jim Turner was a senior partner with Torys and has more than 30 years of experience specializing in securities, mergers and acquisitions, and corporate governance law. The OSC said he has advised some of the largest public companies and financial institutions in Canada on domestic and international matters.

Both vice-chairs have experience working at the OSC. Ritchie served as an enforcement counsel in 1993, and from 1986–1987, Turner served as general counsel to the OSC, providing advice on a range of legal matters with direct responsibility for takeover bids and mergers and acquisitions.

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(02/22/07)