Rising Rates Hurt Canadian Businesses

Rising interest rates, material, and labour costs are hurting profit margins at many Canadian companies, forcing them to re-evaluate growth plans and pass costs to customers, says a poll by KPMG Canada. Seventy-one per cent of surveyed owners and decision makers say higher rates put ‘material pressure’ on profit margins, with over half (54 per cent) expecting some type of impairment to their business. For nearly half (45 per cent), higher rates have derailed their growth and/or investment plan. Restructuring is about approaching best and worst cast scenarios with a different lens and finding creative solutions to solve them, says Paul van Eyk, partner and national leader, restructuring and turnaround services, deal advisory, KPMG in Canada. “As companies weather through these challenges, some businesses may have impaired values in the short term, but those values will once again rise. The issue is when the timing of that return is uncertain, companies need to pivot away from managing to a value and now start managing to liquidity and cash flow.”