Profits slide across UK industry
6 Oct 2003
Chemical industry chiefs in the UK may be looking with hope at the first signs of a recovery in Europe and the US, but a new report from business analyst Experian shows just how deep a hole the UK corporate world is in.
On average, it says, UK companies' profitability has dipped to below 6% for the first time - and at the end of March 2003, it fell for the 16th consecutive quarter.
According to the report's author, Peter Brooker, only two of the 24 sectors studied in Experian's annual health check showed any growth in profitability - measured as return on capital employed (ROCE) - in the last four years. These sectors were oil and alcoholic beverages.
The engineering sector is the least profitable of the lot. Profitability fell by three-fifths from the first quarter of 2002 to the same point in 2003, and the months leading up to the invasion of Iraq saw manufacturing output fall further.
In the process industries, the chemical sector saw ROCE fall from 7.11% in Q1 2002 to 6.42% in Q1 2003, from a peak of 12.94% in Q4 1997; and pharmaceuticals slipped from 30.31% to 23.54%, from a 42.69% peak in Q2 1998.
Better news could be on the horizon, though.
'The economic outlook does appear to be on the turn,' says Brooker. 'Although there has been little sign of the expected 'Baghdad Bounce' following the end of official hostilities in Iraq, economists are more confident of an upturn in both the US and the Eurozone in 2004.'
