UK profitability falls for third consecutive year

The
profitability of UK companies has slumped by 40 per cent over the last three
years, falling for an unprecedented 12 consecutive quarters, according to new
findings.

Across
the economy as a whole, the average return on capital – a leading measure of
profitability – fell from 10.84 per cent in the year to March 2001 to 8.37 per
cent this year.

The
motor trade was the worst hit with profit margins dropping by a third – from
9.23 per cent to 6.16 per cent – despite record car sales.

Research
from business service firm Experian shows that IT and telecoms also suffered,
both recording a collapse in profitability of more than 30 per cent.

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The
research looked at the profitability of more than 2,000 companies during its
Corporate Health Check.

By Ross Wigham