The Royal Canadian Mint’s profits fell by more than 60 per cent according to the Crown corporation’s third quarter (Q3) 2016 financial report, which was released on Friday.
Revenues fell by $208.3 million—a loss of about 27 per cent—and profits dropped by $6.5 million, or 61 per cent.
“Consolidated profit of $4.2 million in the quarter demonstrates the strength of our diversified business model which continues to generate significant value for the Mint and our shareholder and also positions us for growth even as we face challenges in today’s marketplace,” said Sandra Hanington, Mint president and CEO. “The strong performance of our Bullion and Circulation Products and Solutions businesses helped sustain profitability in the quarter while we repositioned our Numismatics business.”
“We’ve taken a fresh look at our Numismatics programs and related accounting treatments and made a strategic choice to move away from the Face Value program which has brought hundreds of thousands of new customers to the Mint over the past five years. As the Mint continues to execute on our strategy and enhance our capabilities, we are developing a plan to strengthen and grow our Numismatics business, which includes a robust program to celebrate Canada’s 150th anniversary,” said Hanington.
“We are encouraged by the results that our new customer-driven strategy has already produced and we look forward to further achievements and improved profitability.”
FINANCIAL & OPERATIONAL HIGHLIGHTS
- Consolidated profit before taxes and impairment decreased to $4.2 million in the quarter (compared to $10.7 million in Q3 2015)
- Consolidated profit after taxes increased to $2.4 million in the quarter (compared to a loss of $43.6 million in Q3 2015)
- Consolidated revenue decreased to $553.8 million (compared to a loss of $762.1 million in Q3 2015)
- Reduced availability of recycled coins resulted in increased Canadian coin production; 182.6 million pieces in the quarter (compared to 58.2 million pieces in Q3 2015)
- Shipment of a total of 517.7 million circulation coins and blanks in the quarter (compared to 336.6 million in Q3 2015)
- Lower bullion demand contributed to reduced sales volumes in the quarter compared to 2015 near-record levels
- Gold and silver volumes were 201,000 ounces (compared to 336,500 in Q3 2015) and 6.1 million ounces (compared to 9.5 million in Q3 2015), respectively
- Sales of numismatic gold products increased 30 per cent while sales of numismatic non-face value silver products decreased 13 per cent in the quarter compared to Q3 2015 resulting in a net decrease in revenue of $2.6 million
- Operating expenses were carefully managed, down nine per cent for the quarter to $31.4 million in the quarter (compared to $34.5 million before impairment in Q3 2015)
- Cash declined to $93.3 million at Oct. 1, 2016 from $140.8 million at Dec. 31, 2015; in this period, the Mint declared and paid a dividend of $31 million to the Government of Canada
FACE VALUE COINS
Earlier this year, the Mint “phased out” its face value program due to poor sales and high redemption rates.
According to the Mint’s 2016 Q2 financial report, released last August, revenue from numismatics declined nine per cent to $42.3 million in the second quarter of 2016 compared to the second quarter of 2015.
“This change is largely the result of lower second quarter demand for gold and silver numismatic products and reduced sales of face value coins,” reads the report. “Management is closely monitoring the performance of its face value program and implementing action to mitigate sales returns in the future.”
For more information about the Mint’s 2016 third quarter financial report, visit mint.ca.