Australian Companies Face Sharper Profit Decline in 2024
Substantial Drop Projected, Exceeding Previous Year's Decrease
Forecast Decline Steepest in SP ASX 200 Index Firms
Australian companies, particularly those listed on the benchmark SP ASX 200 index, are anticipated to experience a steeper decline in profits this year compared to 2023. This projection comes from financial services firm UBS, which forecasts a 35% drop in profits for the 2024 fiscal year.
This decline is notably more substantial than the 29% decrease observed in the previous fiscal year. The downward trend is attributed to several factors, including a challenging economic environment characterized by rising interest rates and inflation, as well as ongoing supply chain disruptions.
In the face of these headwinds, Australian companies are confronting difficulties in maintaining the exceptional profit margins achieved during the pandemic-led economic recovery. Moreover, the ongoing conflict in Ukraine is exacerbating global supply chain challenges and adding to inflationary pressures.
Despite the expected profit decline, UBS remains cautiously optimistic about the long-term prospects for Australian companies. The firm cites the resilience and adaptability demonstrated by these firms during previous economic downturns.
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