The overall profitability of UK private non-financial corporations in the third quarter of 2005 was 13.4 per cent, which was lower than the estimate of 13.8 per cent recorded in the previous quarter.
The net rate of return for oil and gas extraction companies increased in the third quarter of 2005 to 36.3 per cent, compared to 34.4 per cent recorded in the previous quarter. This is higher than the average of 29.3 per cent for 2004.
Manufacturing companies' net rate of return was estimated at 6.2 per cent in the third quarter. This is lower than the average of 7.1 per cent for 2004.
The profitability of service companies in the third quarter of 2005 was 16.6 per cent, which was higher than the 16.5 per cent recorded in the previous quarter and the average for 2004 of 16.3 per cent.
Generally, service sector profitability is higher than that of the manufacturing sector, reflecting the more capital-intensive nature of the manufacturing sector.
Notes: Profitability is defined as the net rate of return on capital employed. That is, it is the value of profits (allowing for depreciation) divided by the value of fixed assets (allowing for depreciation) and inventories.
Non-financial corporations comprise: oil and gas extraction companies, manufacturing companies, service sector companies, and other companies. Estimates are published for the total and for the first three components; no estimates of profitability are published for the 'other companies' sector.
The rates of return for oil extraction companies can vary more than for the other sectors due to the nature of the fixed assets used in the oil and gas extraction industry and the factors affecting their profits.
Further information on the definitions of profitability and how it is calculated can be found by clicking on the link to 'Guide to Profitability' in the right hand column.