UK Companies Are Maintaining Profitability

The profitability of UK non-financial corporations in Q2 2013 as measured by net rate of return (NNR) was estimated by 11.4% according to the ONS. It compares well with the last 18 months but is lower than 2011. The revised estimate for Q1 was 11.3%.

The manufacturing sector reported net rate of return of 7.2% in Q2 2013 one of the lowest levels since 2003. Services NRR was estimated to have been 15.1% in Q2 equal to Q1 but higher than the last two and a half years. UK continental shelf companies (oil & gas) NRR, which are not directly comparable with other industrial sectors and can be very volatile, grew by 37.4%. Non-UKCS companies grew by 10.7%.

Putting it into context, real GDP grew by 0.7% in Q2 2013 and the NRR of UK companies was 11.4%, an increase of 0.1%. The operating profits of UK non-financial corporations increased by 1.2% (according to Quarterly National Accounts) suggesting that profits are increasing at a faster rate than capital employed.

Returns For UK Companies Fall Again

There has been another slight fall in the net rate of return by private non-financial UK companies in Q1 2010 following a fall last year. The net rate of return was 11.1% (11.4% gross) compared with the revised estimate of 11.3% and 11.6% in 2009.

Service companies NRR was 14.4% (14.3% gross), slightly down on the 14.7% of Q4 2009 and the 16.4% of the same quarter last year. Manufacturing companies NRR was 6.4% (Gross=7.5%) down from the 6.9% of the previous quarter and the 8.3% of the same quarter last year. Companies other than UK continental shelf companies reported NRR of 10.2%. UKCS companies NRR was 36.4% (Gross=22.4%) an improvement on the 32.3% (20.6%) of Q4 2009.

UK Companies NRR Down Slightly

UK non-financial corporations reported a net rate of return of 11.5% in the third quater of 2009 according to the Office for National Statistics recent statistical bulletin on the profitability of UK companies. It compares with a revised estimate of 11.7% for the previous quarter. The annual net rate of return for 2008 was 14.1% compared with 14.2% for 2007.

The statistics for the latest quarter show that manufacturing companies NRR was 6.9%, services NRR was 12.9% and the NRR for companies of the UK continental shelf was 34.6%. The net rate of return for companies other than those of the UK continental shelf was 10.6%. Manufacturing companies NRR was comparable with earlier years, services NRR was lower than 2008's 15.4%.