Judging from the results of a cross-section of 30 publicly traded Canadian non-financial services businesses, corporate sales and earnings have picked up as of midyear. This is important, because it enhances the prospects for a business recovery — although third-quarter results will be needed to confirm the trend.

The one doubtful point in the survey is the weakness of free cash flow — operating cash flow after capital spending and dividend payments — in the quarter ended June 30.

However, data from Statistics Canada and national accounts for this year’s first quarter paint a darker picture of the economy’s tumble. The contrast suggests that small businesses — the kind of operations too small for the stock market — have also been hit hard.

This would confirm the precept that in bad times large-cap companies have less risk than small businesses.

Here are some highlights (and low points) from various sources:

> Statistics Canada says that revenue of non-financial enterprises in Q1 2009 dropped by 3.5% from a year prior. During 2008, revenue increased; it peaked at 9.4% in the third quarter.

> An Investment Executive survey of 30 publicly listed companies shows that Q1 sales per share were 0.9% higher than in the same period a year prior. In Q2, sales per share gained 1.2% vs Q2 2008. (Sales per share are used to take into account capitalization changes in individual companies, as well as to avoid the results being overwhelmed by numbers from large-cap companies.)

> Net profit margin in StatsCan’s Q1 report on non-financial enterprises dropped to 3.5% from a recent high of 7.9% in Q3 2008.

> IE’s survey of the 30 companies showed that the average net profit margin (earnings margin) softened to 4.6% in Q1, but picked up to 6% in Q2. The recent high in net profit margin — 15.4% — was in Q3 2008.

> The profit picture in the national accounts is even darker. In Q1, pre-tax profits dropped by 34% below the Q1 2008 level. In the fourth quarter of 2008, the pre-tax profit drop was 12% vs Q4 2007.

> Operating margins (operating profit margin) follow the same pattern as net profit margins. In the StatsCan report, operating profits as a percentage of revenue dropped to 5.8% in Q1 from a recent high of 7.9% in Q3 2008. In the IE corporate survey, the average operating margin dropped to 9% from 23.3%, respectively. That said, operating margins rose to 11.3% in Q2, which is encouraging.

> StatsCan’s survey shows a 28% year-to-year drop in Q1 profits before extraordinary items. This was less than the 35% drop experienced in Q4 2008.

> IE’s corporate survey indicates that earnings per share rose by an average of 2% in Q2, with earnings up by 1% year-over-year in both Q4 2008 and Q1 2009.

> In IE’s corporate survey, free cash flow per share increased to 1.9% year-to-year in Q4 2008; it gained 1% in Q1 2009, but dropped to 0.7% in Q2. This is a more basic indication of corporate financial strength than earnings, and suggests the recovery seen in Q2 may lack a good foundation. IE