Edge taken off UK companies’ profitability by oil price drop

Chris Papadopoullos
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UK COMPANIES lost profitability to­wards the end of 2014, led by strug­gling firms in the oil industry.

However, the longer-term trend is a healthy one for most firms, according to figures released by the Office for National Statistics yesterday (ONS). “Continental shelf companies, which are mainly involved with the extraction of oil and gas from the North Sea, have seen a dramatic fall in the net rate of return between 2013 and 2014, from 26 per cent to 15 per cent,” it said.

“Although the profitability of these companies may have been affected by the recent decline in oil prices, they have seen their net rate of return decline since 2011, and therefore other factors may be relevant.”

The profitability of continental shelf companies dropped to 10.4 per cent in the final three months of 2014, the lowest since 1997.

Profitability over all non-financial private companies dropped to 11.9 per cent in the final three months of 2014 from 12.3 per cent in the previous three months. Despite the drop, profitability is still higher than it was at any point between the second half of 2008 and the start of 2014.

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