Corporate profit forecasts remain modest

Corporate profitability, excluding financial companies, fell to 11.1 per cent in the first three months of this year from a downwardly revised 11.3 per cent in the closing months of 2009, official data yesterday revealed.

For manufacturers, the net rate of return fell to 6.4 per cent from 6.9 per cent, and for service companies it fell to 14.4 per cent from 14.7 per cent.

Companies focused on the UK Continental Shelf, where the offshore oil and gas industry is located, saw a profitability rate of 36.4 per cent, up from 32.3 per cent in the final quarter of 2009.

Howard Archer, chief UK economist at IHS Global Insight, the forecasting group, said: "With recovery likely to remain gradual and bumpy, the upside for corporate profitability is likely to be modest in the near term at least."