Economic overview July 2014: The disconnect between the economy and JSE company earnings

South African companies’ profits growth has waned. Using net operating surplus (gross operating surplus adjusted for consumption of fixed capital), calculated from South Africa’s national accounts data, as a proxy, shows the advance in total companies’ profits (financial plus non-financial companies) weakened markedly in recent years, following  a temporary bounce in the immediate aftermath of the “Great Recession”. Indeed, in 2013, profit growth was the weakest since 1998. 

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