Annual wholesale trade, 2018
The operating revenue of Canadian wholesalers increased 9.0% in 2018, reaching an all-time high of $1.1 trillion. The increase was led by the petroleum products subsector, but seven of the eight other subsectors also saw increases in revenues. Excluding petroleum products, operating revenues increased 5.3% compared with 2017.
Overall, the operating profits of wholesalers as a percentage of total operating revenue increased from 4.9% in 2017 to 5.2% in 2018, as revenue growth exceeded growth in total operating expenses.
The cost of goods sold, which represents the cost of acquiring goods for resale, increased 9.2% to $932.8 billion in 2018. This was driven by growth in the cost of goods sold in the petroleum subsector, which rose 19.8% from 2017 levels to $287.6 billion in 2018. Over this period, the Raw Materials Price Index for conventional crude oil rose 20.5%.
Total operating expenses, which include labour remuneration, were up 5.1% to $128.5 billion. Total operating expenses were up in all subsectors except farm products, where they were down 0.6% to $2.3 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 slightly from 16.8% in 2017 to 16.7% in 2018 as the growth of the cost of goods sold slightly outpaced the growth in revenue.
Wholesale revenues up in all but one subsector
The largest increase in operating revenue was observed in the petroleum products subsector, up 20.6% to $301.8 billion in 2018 mainly because of higher oil prices. This is the highest operating revenue in this subsector since 2014.
In 2018, wholesalers of petroleum products accounted for the largest proportion of operating revenue (27.0%) in the wholesale trade sector, up from 24.4% in 2017.
In dollar terms, the second largest increase in revenue was observed in the machinery, equipment and supplies subsector, up 8.4% to $161.7 billion in 2018. All four industries in this subsector recorded increases in operating revenue, led by the construction, forestry, mining, and industrial machinery, equipment and supplies industry, which saw its revenues increase 13.7% to $53.0 billion. The other machinery, equipment and supplies merchant wholesalers industry also contributed significantly, with revenues increasing 13.5% to $39.7 billion in 2018.
The only subsector to see its operating revenues decline was the motor vehicle and motor vehicle parts and accessories subsector, which recorded a decline of 0.8% to $129.8 billion. The decline in this subsector was attributable to the motor vehicle industry, which saw its revenues decrease by 1.8% to $101.7 billion. This decline was partly offset by growth in the new and used motor vehicle parts and accessories merchant wholesalers industries.
Gross margins of wholesalers fall
Expressed as a percentage of total operating revenue, gross margins fell from 16.8% in 2017 to 16.7% in 2018. Lower gross margins were reported by four of the nine subsectors.
Gross margins 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 (4.7%). The highest margin was in the machinery, equipment and supplies subsector (26.7%), followed by the personal and household goods subsector (25.1% in 2018, up from 24.8% in 2017).
Operating profits increase
In 2018, six of the nine subsectors posted annual increases in their operating profits as a percentage of total operating revenue. Overall, operating profits increased to 5.2% from 4.9%.
Among wholesale merchants, motor vehicle and parts wholesalers posted the largest increase in operating profits, increasing from 4.8% in 2017 to 5.7% in 2018, as the cost of goods sold declined faster than total operating revenue.
Wholesale revenue up in most provinces
In 2018, 7 of the 10 provinces and all three territories reported higher wholesale operating revenue compared with 2017. Overall, operating revenue in Canada increased by $92.6 billion in 2018. Growth was driven primarily by the two provinces that account for the greatest share of wholesale trade at the national level; operating revenue was up $39.6 billion in Alberta and increased $21.4 billion in Ontario.
Overall, wholesale operating revenue in Ontario remained higher than in Alberta, increasing 5.3% to $422.3 billion, as all but one subsector posted increases from 2017 to 2018. The only decline in Ontario was observed in the motor vehicle and motor vehicle parts and accessories merchant wholesalers subsector, which posted a 3.3% decline in operating revenue.
Operating profits in Ontario came in at 6.3% in 2018, up slightly from 6.1% in 2017. The cost of goods sold by wholesalers in Ontario increased by 5.0% from 2017 to $333.7 billion in 2018. Meanwhile, total operating expenses for Ontario wholesalers were up 5.3% annually to $61.9 billion in 2018.
In 2018, wholesalers in Alberta reported a 14.5% annual increase in operating revenue to $312.4 billion. The increase was mainly attributable to the petroleum products subsector (+18.6%), which accounted for over 70% of wholesalers' operating revenue in the province. Eight of the nine wholesale subsectors in Alberta saw their revenues increase in 2018. The second largest wholesale subsector in Alberta was machinery, equipment and supplies, which posted an 8.1% increase in operating revenue, led by an 11.6% increase in the construction, forestry, mining, and industrial machinery, equipment and supplies industry.
Operating profits in Alberta came in at 4.7% in 2018, up from 3.8% in 2017. This was driven primarily by an increase in the operating profits of Alberta's petroleum products wholesalers, which increased from 2.6% in 2017 to 3.9% in 2018. The cost of goods sold by wholesalers in Alberta increased by 14.0% from 2017 to $280.5 billion in 2018. Meanwhile, total operating expenses for Alberta wholesalers were up 4.4% annually to $17.3 billion in 2018.
Wholesalers in Quebec posted the third highest provincial total operating revenue at $163.8 billion in 2018, up from $153.5 billion in 2017. Seven of the nine wholesale subsectors in Quebec posted higher operating revenues in 2018, led by petroleum products wholesalers, whose revenues increased 19.1% compared with 2017.
Operating profits in Quebec came in at 5.0% in 2018, unchanged from 2017. The cost of goods sold by wholesalers in Quebec increased by 6.9% from 2017 to $130.1 billion in 2018. Meanwhile, total operating expenses for Quebec wholesalers were up 5.8% annually to $25.6 billion in 2018.
Wholesale trade commodities
Wholesalers across Canada buy and sell a wide variety of commodities, ranging from petroleum products, motor vehicles, pharmaceuticals, wood products and clothing to a large selection of food products.
The Annual Wholesale Trade Survey measures the sales and costs of goods sold for these and other products, classifying them according to the North American Product Classification System (NAPCS).
In 2018, Canadian wholesalers sold over $1.0 trillion worth of commodities. Compared with 2017, sales—including wholesale trade commissions—increased 8.5%, driven primarily by increases in sales of petroleum and petroleum products. Excluding petroleum and petroleum products, total sales of wholesale commodities increased 5.4% in 2018 compared with 2017, while the cost of goods sold increased by 5.6%. Higher sales and cost of goods sold were seen in more than half of the commodity subclasses in 2018 compared with 2017.
In dollar terms, petroleum and petroleum products led the way in the growth of both sales and cost of goods sold. Sales increased $44.8 billion to $293.1 billion in 2018, while the cost of goods sold increased $44.0 billion to $283.6 billion.
The top five commodity subclasses accounted for 48.7% of all sales—including wholesale trade commissions—in 2018, up from a 47.8% share in 2017. This was driven primarily by growth in petroleum and petroleum products, which saw their share of total sales, including wholesale trade commissions, increase from 24.7% in 2017 to 26.9% in 2018.
In 2018, the second largest commodity subclass in dollar terms was automobiles, light trucks and vans, representing a 7.1% share of total wholesale sales—including wholesale trade commissions—down from 8.6% in 2017. Sales in this subclass declined by $8.8 billion in 2018 compared with 2017.
Wholesale trade financial estimates, by North American Industry Classification System category
Note to readers
Data for 2017 have been revised.
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