OTTAWA – March 27, 2008 – Export Development Canada (EDC) today announced that its combined financing and insurance volumes reached a record $77.7 billion in 2007, a 17.5 per cent increase over 2006.
EDC facilitated $20.8 billion in trade e with emerging markets, a 37 per cent increase over 2006. EDC was also involved in $9.6 billion in Canadian direct investment abroad, a 39 per cent increase over 2006. More than 84 per cent of EDC's customers were small- and medium-sized enterprises, and the value of their business through EDC grew by 25 per cent to $18.8 billion.
"EDC's business model is designed to support a greater appetite for risk. This enables us to deliver results for Canadian exporters at any period of the credit cycle, b ut particularly so when tighter credit conditions and slower global growth threaten their ability to compete," said President and CEO Eric Siegel. "Canadian companies are turning to us as they work to remain competitive amid a much higher dollar and slowi ng economies and their higher risk mitigation needs have driven our strong business results."
EDC's performance is an important element within the Government of Canada's Global Commerce Strategy. In 2007, EDC participated in nearly 15 per cent of Canada's total exports in goods, services and investments, with that total climbing to 38 per cent in Canada's trade and investment with emerging markets. The transactions facilitated by EDC in 2007 are estimated to have generated $55.6 billion of Canada' s GDP or 4.5 per cent of the total. This export and investment activity was also associated with sustaining more than 624,000 jobs, representing approximately 3.7 per cent of national employment.
Brazil, Russia and the Commonwealth of Independent States (CIS), India, China and Mexico continue to be the priority emerging markets for Canadian companies because of their growth rates, importance to global supply chains and alignment with Canadian strengths. EDC business volumes in these markets totale d more than $8 billion in 2007, up from $6.8 billion in 2006, with notable growth in China at $1.7 billion (up 75 per cent), Russia and the CIS at $1.6 billion (up 28 per cent) and India at $1.2 billion (up 62 per cent).
"EDC's growth in emerging markets reflects the efforts of Canadian companies to grow their business where economies are booming and to reduce their operating costs through foreign investments," continued Mr. Siegel. "EDC announced four new foreign representatives this year in ke y emerging markets, bringing the total number to 13 worldwide. Their work strengthens our relationships with foreign buyers, and helps create new opportunities for Canadian exporters."
EDC's business activities were strong across most regions of C anada. Regionally, western Canada led the country, accounting for 37 per cent of EDC's total business volume followed by Ontario (33 per cent), Quebec (28 per cent), and Atlantic provinces (2 per cent).
EDC's record business volume in 2007 resulte d in increased exposure and consequently higher provisioning requirements that led to a reduction in net income. EDC's net income in 2007 was $473 million compared to $1.2 billion in 2006. EDC recorded a $328 million charge for provision for credit loss es in 2007, in contrast to 2006 where there was a $376 million release of provisions. Also contributing to the decrease in net income was a significant reduction in the amount of debt relief received ($1 million in 2007 compared to $260 million in 2006). Debt relief represents funds received by EDC from the Government of Canada when it forgives the sovereign debts of highly indebted developing countries incurred in prior years.
EDC's operating income was $801 million for 2007, below the $880 mi llion reported in 2006 as a result of the lower debt relief income. Excluding the impact of debt relief, operating income actually increased by 29 per cent. The increase is primarily the result of portfolio growth, successful airline restructurings and a lower level of impaired loans.
As a result of EDC's 2007 business results, EDC's Board of Directors approved the payment of a $250 million dividend to the Government of Canada. The payment was made under EDC's Capital Adequacy Policy which allow s the Board of Directors to consider a dividend payment when the Corporation's capital exceeds its forecast needs. Dividends paid by EDC to the shareholder since 1993 total $720 million.
Other key results include:
• EDC's assets increased by 1.2 per cent to $23.1 billion from December 31, 2006;
• The total allowance for loan-related losses and insurance claims was $2.3 billion at December 31, 2007;
• Total paid-in capital, retained earnings (including a ccumulated other comprehensive income) and allowances at December 31, 2007 were $8.3 billion;
• Impaired loans as a percentage of gross loans receivable decreased from 8.2 per cent at the end of 2006 to 3.1 per cent at December 31, 2007, reflecti ng the reclassification of impaired loans to performing status primarily within the aerospace industry;
• EDC has no investments in asset backed commercial paper, as well as no investments in sub-prime mortgage instruments.
• Over the past three years as a result of airline bankruptcies a number of aircraft were returned to EDC when the airlines elected to return all or a portion of their aircraft. Four aircraft were sold in 2007 and the remaining 54 returned aircraft have all been redeployed on leases with various airlines;
• The number of insurance claims paid was 1,341, a 4 per cent increase from 2006. The dollar value of those claims was $57 million compared to $61 million in 2006;
• Administrative expenses increased by 8 per cent to $219 million from $203 million in 2006; and
• The number of employees at December 31, 2007 was 1,068 from 1,056 in 2006.
EDC is Canada's export credit agency, offering innovative commerc ial solutions to help Canadian exporters and investors expand their international business. EDC's knowledge and partnerships are used by nearly 7,000 Canadian companies and their global customers in up to 200 markets worldwide each year. EDC is financiall y self-sustaining and is a recognized leader in financial reporting, economic analysis and has been recognized as one of Canada's Top 100 Employers for seven consecutive years.
- 30 -
Media contact:
Phil Taylor
Corporate Communications
Export Development Canada
(613) 598-2904
ptaylor@edc.ca
