Robust collector and bullion sales driving up RCM’s profits

While the Royal Canadian Mint’s annual report may be a month or two away, the third quarter indicates the Crown corporation has had a strong year with both revenue and profits up dramatically from 2012. According to the report, an unaudited document the RCM has been required to file since it gold and silver Exchange-Traded Receipts (ETR) began trading on Canadian commodity markets, revenue for the first nine months of 2013 were up 53.2 per cent over the previous year to $2.592 billion, with after profit taxes up 45.6 per cent to $28.4 million.

The report period covers 2013 up to September 29, with the Mint’s fiscal year ending Dec. 31.
The report noted the high profit “reflects the sharp increase in revenue in the numismatic and collectibles, foreign and bullion, refinery and ETR business lines and the steadily growing demand for the Mint’s productions in Canada, Europe, the United States, Asia, and South America.” However, revenues in general Canadian circulation coins dropped 7.7 per cent during the first nine months of 2013, to $100.1 million.

The drop was largely because no more one-cent coins were ordered, and setting up 300 coin-counting machines in Canadian banks has reduced the demand for new coins at financial institutions. Revenue from the alloy recovery program, which culls older non-plated coins from circulation, dropped 19 per cent to $8.3 million as fewer and fewer nickel coins remain in circulation. Sales of gold maple leafs tapered off during the third quarter while demand for silver maple leafs remained strong. A total of 195 thousand ounces of gold and 6.7 million ounces of silver maple leaf coins were sold in the quarter. Revenue for bullion and related products was up 59 per cent over the previous year to $2.3 billion, clearly the largest single product line for the RCM. The report had praise for numismatic sales, the term the RCM uses to describe coins sold to collectors and the gift market, which have been strong all year.

“Demand for numismatic coins continues to strengthen due to the Mint’s ability to develop coins of wide popular appeal as well as the popularity of coins produced with new technologies and embellished with special features such as ultra-high relief,” the report stated.
Sales of numismatic and collectibles was up 12 per cent to $120.8 million for the three quarters of 2013. While the total sales numbers are considerably lower compared to bullion, numismatic and collectibles coins have the highest profit margin in the RCM’s lineup.
The report also revealed the demand for Canadian coins in the U.S. increased, “partially due to coins designed for the U.S. market, such as the bald eagle series of coins, and broader awareness through dealer efforts.” Foreign sales continue to be driven by a large multi-year foreign circulation coin contract. Total foreign sales for the first nine months of 2013 reached $42.5 million, up 178 per cent. During the third quarter, the RCM shipped 595.7 million coins and blanks to nine countries, compared to 177.1 million coins and blanks to nine countries the previous year.

Also, in the third quarter, the RCM won contracts to produce coins in the Caribbean, Asia, the Middle East, and Europe. The contracts represent both circulating and collector coins. The final figures for 2013 will not be available until the annual report is released to the public, which typically occurs in late April or early May.

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