This article reviews the performance of companies during 1986 and discusses some of the issues which they face in this, the sixth year of the recovery. It is principally concerned with the performance of non North Sea companies but also includes data and comment for the sector as a whole. Among the main points are:
- The fall in oil prices depressed the performance of North Sea companies, but helped boost margins, profits and rates of return in non North Sea companies to their highest levels since the early 1970s.
- Dividends continued to rise as a proportion of companies' income.
- Investment expenditure remained subdued, despite steady output growth, and capacity utilisation continued to rise.
- Acquisition and merger activity remained strong throughout the year, both at home and abroad.
- The pattern of company financing switched heavily towards capital issues (mainly in the equity markets), while the growth of bank borrowing may have eased a little.
- Companies continued to build up liquid assets rapidly.