Canada profit growth slows, fate shackled to Europe

Sun Jan 22, 2012 10:40am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Jennifer Kwan

TORONTO (Reuters) - Slower profit growth is in the cards for Canada's biggest companies this year, as Europe's downturn dims the outlook but mounting U.S. economic strength provides support.

The quarterly reporting period for the country's blue chip corporations swings into high gear this week, with Canadian Pacific Railway (CP.TO: Quote) and fertilizer company Potash Corp (POT.TO: Quote) among those releasing results.

Companies whose shares comprise the blue-chip S&P/TSX 60 index are expected to report average quarterly earnings growth of 3 percent from a year earlier, according to Thomson Reuters StarMine SmartEstimates.

That's a far cry from the forecast for earnings growth for companies on the U.S. Standard & Poor's 500 .SPX, a much broader index, which StarMine puts at 23 percent.

"The tug of war is between the bad news out of Europe and the good news from North American companies and the North American economy," said Kate Warne, Canadian market strategist at Edward Jones.

"We expect to see more of it this year - worries about Europe balanced and really offsetting the fact that companies continue to do well."

The S&P/TSX 60 is seen doing better as the year goes on, with 2012 earnings growth expected to come in at 11.5 percent. S&P 500 earnings increases are seen at 10.3 percent for 2012.

Still profit growth at big Canadian companies would be well below the estimated 16.4 percent rate of 2011.   Continued...