Four out of five companies in Canada’s oil and gas sector, and three of every four companies in Canada’s manufacturing sector were negatively impacted by the higher value of the Canadian dollar, according to CAs who hold senior corporate positions interviewed for the most recent CICA/RBC Business Monitor.

According to the Q4 report, 43% of the respondents in Canada’s manufacturing sector say their companies have increased business development activity, while 32% say their companies reduced prices in late 2007. Meanwhile, in the oil and gas sector, 53% of the respondents indicated their companies have not attempted to combat the negative impact of the rising Canadian dollar.

“CA respondents make it clear that the appreciation of the Canadian dollar continues to impact the competitiveness of companies across the country,” says Kevin Dancey, president and CEO, Canadian Institute of Chartered Accountants (CICA). “Depending on the sector, other variables will have an impact on business decisions of CAs serving in leadership roles. CAs in the oil and gas sector, for example, face high drilling costs, increasing royalties and lower prices for natural gas.”

Another finding from the report was that only one in five (21%) of the respondents had taken advantage of decreased costs due to the high dollar to purchase – or to plan to buy – capital goods.

“In some sectors, concern over the outlook may be a reason for not investing,” notes Tracy Stevenson, vp of business financial services at RBC. “However, the 21% who are leveraging this advantage may well be the ones to grow, by capitalizing on a golden opportunity to invest to increase their competitiveness.”

Nationally, average profitability estimates for the next 12 months across all sectors dropped to +3%, from +5.2% in the third quarter. This decline was most pronounced in the manufacturing sector, where average profit estimates dropped to -0.3% from +3.8%, and in the oil and gas sector, where average profit estimates dropped to +0.6% from +5.8%.

In the final quarter of 2007, CAs in senior executive positions were less likely to be optimistic about prospects for their businesses over the next 12 months than over the previous two quarters. This decline was most apparent in Alberta, with only 51% expressing optimism in their businesses compared to 79% in Q2 of 2007. Just over half the respondents in Ontario (55%) and Quebec (56%) expressed optimism for the future 12 month prospects of their businesses, compared to 69% (Ontario) and 53% (Quebec) in Q2. Optimism about 12 month business prospects was highest in British Columbia with 67% of B.C.’s respondents expressing optimism, compared to 86% in Q2.