Statistics Canada : Annual wholesale trade, 2015

Released: 2017-01-24

The operating revenue of Canadian wholesalers declined 6.6% in 2015, falling below the $1.0 trillion mark reached in 2014.

While eight of the nine subsectors increased, declines in the petroleum products subsector led to the overall drop in wholesale sales. Excluding petroleum, operating revenues increased 3.9% compared with 2014.

Overall, the operating profits of wholesalers as a percentage of total operating revenue increased from 4.2% in 2014 to 4.4% in 2015. Excluding petroleum, operating profits were 5.4% in 2015, unchanged from 2014, while petroleum products wholesalers earned operating profits of 1.3% in 2015, down from 1.8% in 2014. The petroleum subsector has historically had the lowest operating profits in the wholesale sector, so the decline in the relative importance of the petroleum subsector raised the overall wholesale operating profits in 2015.

The cost of goods sold, which accounted for 83.0% of total operating revenue, declined 8.1% to $809.2 billion in 2015. This was attributable to the decline in the costs of goods sold by the petroleum subsector, which fell 27.9% from 2014 levels to $239.3 billion in 2015. During that time, the Raw Materials Price Index for conventional crude oil fell 38.0%. The declines in the petroleum subsector were offset somewhat by a 9.6% increase in the cost of goods sold by the motor vehicles and parts subsector to $104.7 billion.

Total operating expenses, which include labour remuneration, were up 2.9% to $123.5 billion. Total operating expenses in the petroleum subsector were down 14.2% to $5.2 billion, but this was offset by increases in total operating expenses in seven of the eight remaining subsectors.

Gross margins for wholesalers (the difference between total operating revenue and the cost of goods sold expressed as a percentage of operating revenue) increased from 15.7% in 2014 to 17.0% in 2015. The declining share of petroleum in the sector was behind the increase in overall gross margins, as the petroleum subsector had the lowest gross margins in the wholesale sector at 3.4% in 2015, down from 3.6% in 2014. Excluding petroleum, wholesale gross margins in 2015 were unchanged at 21.7%.

Most subsectors increase, while the petroleum products subsector declines

In dollar terms, the most substantial change in operating revenue was observed in the petroleum products subsector, down 28.0% to $247.7 billion in 2015. The petroleum sector was heavily affected by the lower price of oil in 2015 compared with 2014. It was the lone wholesale subsector with lower operating revenue in 2015.

Wholesalers of petroleum products accounted for the largest proportion of operating revenue in the wholesale trade sector in 2015 with 25.4% of total operating revenue, down from 32.9% in 2014.

The largest increase in revenue was observed in the motor vehicles and parts subsector, up 9.7% to $124.3 billion in 2015. The main contributor among the three industries in this subsector was the motor vehicle industry, with a 12.2% increase in operating revenue. This industry alone accounted for 94.5% of the change in total operating revenue for this subsector. Both exports and imports of motor vehicles and parts increased in 2015, which contributed to the higher operating revenue of motor vehicle and parts wholesalers.

Wholesale operating revenue in the personal and household goods subsector increased 4.9% to $102.7 billion in 2015. Most of the increase in this subsector was due to pharmaceutical and pharmacy supplies wholesalers, with operating revenue up 5.6% to $51.9 billion in 2015.

Gross margins of wholesalers rise

Expressed as a percentage of total operating revenue, gross margins rose from 15.7% in 2014 to 17.0% in 2015. Higher gross margins were reported by three of the nine subsectors, three were down and the rest were flat.

Gross margins as a percentage of operating revenue varied widely among the subsectors, depending on the cost structure of the different types of wholesalers.

Among wholesale merchants, the lowest gross margin was posted by wholesalers of petroleum products (3.4%). The highest margins occurred in the machinery, equipment, and supplies (up from 26.5% in 2014 to 26.9% in 2015), followed by the personal and household goods (down from 25.7% in 2014 to 25.4% in 2015) subsectors.

Building materials and supplies wholesalers saw their gross margins increase from 23.2% in 2014 to 23.5% in 2015, while the gross margins for wholesalers of food, beverage, and tobacco rose from 17.2% in 2014 to 17.5% in 2015.

Operating profits edge up

In 2015, four of the nine subsectors posted annual increases in their operating profits as a percentage of total operating revenue, four were down and one was flat.

Among wholesale merchants, the miscellaneous wholesalers subsector posted the largest gains in operating profit margins, rising from 4.2% in 2014 to 4.8% in 2015. These increases were driven by higher operating profits in the other miscellaneous wholesalers industry, from 2.6% in 2014 to 4.0% in 2015.

Among the other subsectors, wholesalers of petroleum products saw their operating profits decline from 1.8% in 2014 to 1.3% in 2015. Meanwhile, wholesalers of machinery, equipment, and supplies saw their operating profit margin decline from 7.3% in 2014 to 6.7% in 2015.

The operating profits of wholesale agents increased from 14.1% in 2014 to 14.9% in 2015.

Canada's two-track wholesale sector

The wholesale sector performance at the provincial level in 2015 was determined primarily by the relative importance of the petroleum subsector in each province. In provinces where petroleum's share of total operating revenue was high, the wholesale sector declined. Conversely, in provinces where petroleum had a smaller share, their performance was relatively better.

In 2015, five provinces and all three territories reported lower wholesale operating revenue in 2015 compared with 2014. Overall, operating revenue in Canada declined by $69.1 billion in 2015. The decline was driven primarily by an $87.4 billion decrease in operating revenue in Alberta, which was slightly offset by an $18.6 billion increase of in Ontario.

Wholesale operating revenue in Ontario (up 5.4% to $361.8 billion) surpassed that of Alberta in 2015, mostly as a result of gains in the motor vehicles and parts (+12.9%) and the personal and household goods (+6.7%) subsectors. Higher revenue by pharmaceutical and pharmacy supplies wholesalers in Ontario accounted for nearly three-quarters of the increase in the personal and household goods subsector in the province.

Wholesale operating profits in Ontario rose from 5.4% in 2014 to 5.8% in 2015, as revenue increases outpaced gains in the cost of goods sold (+4.9%) and operating expenses (+5.1%).

In 2015, wholesalers in Alberta reported a 24.4% annual decrease in operating revenue to $270.5 billion. The decline was mainly attributable to the petroleum products subsector (-31.4%), which accounted for approximately two-thirds of wholesalers operating revenue in Alberta. Meanwhile, wholesalers in the machinery, equipment, and supplies (-11.1%) and building materials and supplies (-10.0%) subsectors also experienced double-digit percentage revenue decreases.

Wholesale operating profits in Alberta were down from 3.0% in 2014 to 2.6% in 2015. The cost of goods sold declined 25.2%, while operating expenses decreased 3.9%.

Wholesalers in Quebec posted the third highest provincial total operating revenue at $146.7 billion in 2015, up slightly from $146.4 billion in 2014. Quebec petroleum wholesalers posted a 20.3% annual decline in operating revenue to $15.8 billion in 2015, but this was offset by gains in all the remaining wholesale merchant subsectors in Quebec. In particular, food, beverage, and tobacco wholesalers saw their total operating revenue increase by $1.5 billion to $32.2 billion in 2015, while wholesalers of machinery, equipment, and supplies saw their operating revenue increase by almost $1 billion to $19.5 billion.

Operating profits in Quebec edged down from 4.7% in 2014 to 4.5% in 2015. The cost of goods sold by wholesalers in Quebec declined by 0.1% from 2014 to $115.7 billion in 2015. Meanwhile, total operating expenses for Quebec wholesalers were up $600.5 million on the year to $24.3 billion in 2015.

Note to readers

Data for 2014 have been revised.

The gross margin is obtained by subtracting the cost of goods sold from total operating revenue. The figures are expressed as percentage of total operating revenue.

The operating profit is obtained by subtracting total operating expenses plus the cost of goods sold from total operating revenue. The figures are expressed as percentage of total operating revenue.

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