Profitability in the UK IT sector has been falling for the past year, possibly as a result of major investments being postponed until after the millennium, according to an analysis by information company Experian. Return on capital employed declined to 28.7% in the first quarter of this year from 33.3% a year earlier.
Pre-tax margins on sales in the IT sector at 6.13% in the first quarter is down on the 6.3% recorded in the previous three months and is below the 8% average for business as a whole. And, analysis of the figures in the database of Nottingham UK and Orange, California-based Experian, the return on shareholders funds slipped to 40.8% in the first quarter compared with 44.3% a year earlier.
But the debt gearing ratio was virtually unchanged at 21.2% and the liquidity of companies in the sector remained healthy continuing the upward trend over the past three years.
