Features Harvesting Logging Profiles
Snippet 2: Profit margins rise slightly amid regional disparities

Since 2016, we have been asking CFI Contractor Survey respondents what a fair profit range is for an established, productive logging contractor. We defined profit margin as return on revenue as a percentage, or profit before income tax divided by total revenue. For example, $5,000 of profit on $100,000 of revenue represents a five per cent profit margin.

The lumber market remains precarious due to cost pressures, changing policies, wildfires, and dwindling fibre supply. It’s no surprise that profit expectations among logging contractors have only seen a slight increase. Nevertheless, contractors’ expectations vary significantly from province to province.

In our 2024 survey, 72 per cent of respondents across the country felt that an 11 per cent or higher profit margin was fair – up slightly from 70 per cent in 2020 and 68 per cent in 2018. The overall trend shows a modest increase in profit expectations, but the outlook varies sharply by region.

For instance, the negative outlook is most acutely felt by logging contractors on the B.C. Coast, where the percentage of those who feel that 11 per cent or more is a fair profit margin has dropped to 74 per cent, down significantly from 95 per cent in 2020. In contrast, Alberta remains steady, with 100 per cent of respondents continuing to view 11 per cent or more as a fair profit margin, reflecting no change from the 2020 survey.

Meanwhile, contractors in B.C. Interior have seen stable profit expectations, with 78 per cent feeling that 11 per cent or more is fair, consistent with the 2020 figures.

In Ontario, however, there has been an increase in expectations, with 59 per cent of contractors now considering 11 per cent or more to be a fair margin, up from 50 per cent** in 2020. Quebec has also seen a modest rise, from 61 per cent in 2020 to 66 per cent in 2024.

Lastly, in Atlantic Canada, the percentage of contractors who feel that 11 per cent or more is a fair profit margin has increased to 69 per cent from 51 per cent in 2020, reflecting a more optimistic outlook in that region.

One point of concern is that one in five contractors still report making little or no profit, highlighting the continued challenges faced by the industry despite slight improvements in profit margin expectations.

Missed last week’s survey snippet? Find a collection of reports published to date here. Look for more news from the CFI 2024 Contractor Survey in our eNews over the coming weeks, with a final digital report in December and a summary in the November/December print issue. Be sure to subscribe to our free eNews to get all the latest industry news.

This survey was conducted from April to June 2024 by the independent firm Bramm Research, generating 195 replies to a detailed list of questions. Respondents were distributed according to the geographic breakdown of the forest industry, with 42 per cent of respondents in Western Canada, 25 per cent in Quebec and the rest found in Ontario and Atlantic Canada. Within B.C., responses were split between the B.C. Coast and Interior. Many thanks to our Premium sponsor, Link-Belt Forestry and our Gold sponsor, John Deere, for making this research possible.