UK Corporate Profitability And Pharmaceuticals

The profitability of UK companies has finally recovered from therecession, three years after it supposedly ended, according to the global information services group, CCN Group's latest Corporate Health Check of UK firms. Corporate profitability had been stuck at around 11.5% since early 1995, but in the third quarter of 1996 it moved ahead to 12.1% as orders and manufacturing output picked up again, along with a strong upturn in consumer confidence.

"In real terms, allowing for inflation," commented Jo Howard of the CCN Group, "UK profitability has returned to the highest level since before the recession. The real return on capital employed in British industry was 10% in the third quarter, compared with 7.1% in 1991, before the recession began to bite."

This encouraging performance looks likely to be sustainable in 1997. Manufacturing growth in October was the strongest for 18 months, and there was a pick-up in consumer demand fuelled by lower taxes, interest rate cuts, higher incomes and rising employment.