Australia’s profit struggle continues despite global surge

Binaya Dahal

Editorial Intern, Financial Newswire

22 January 2026

A 12.2% annual increase fuelled by technology and media companies saw global profits soar to a projected US$4.5 trillion in 2025, but Australia continues to struggle to gain upward momentum since falling from its peak three years ago.

The latest Global Equity Study by Capital Group which analysed 1,600 largest companies worldwide by market capitalisation over the last decade showed Australian companies recorded just 0.4% in revenue rise from last year, and even its profit growth of US$1.4 billion was boosted by lower one-off costs.

“Profit in the key mining and energy sectors were lower year-on-year, while banking profits were impacted by a combination of restructuring costs, lower non-interest income and the weak Australian dollar and so were also lower year-on-year,” the report stated.

As per the report, most companies outside of those sectors reported higher earnings but only contributed less than one third of country’s profit.

Globally, semiconductor manufacturers in the US, Taiwan and China made up almost one third of global earnings growth.

The total revenue of listed companies jumped by 5.3% to reach US$44.2 trillion, while their total dividends and share buybacks saw 7.7% annual rise to hit US$3.50 trillion mark.

Equity Investment Director at Capital Group, Andy Budden said profits, cash flow and shareholder distributions have all doubled since 2016 and is expanding twice as fast as global inflation.

“This long-term growth has driven up share prices bringing large capital gains, and generated trillions of dollars in cash to return to shareholders,” Budden said.

“Corporate balance sheets are stronger than they were pre-pandemic, and the discipline of capital return has spread beyond the US.

“Markets such as Japan and China have significant headroom to increase shareholder distributions, while in those with tighter cover, like the US, earnings growth is key to sustainably higher payouts.”

Despite this rapid growth, total distribution cover, which measures the extent to which profits are larger than the cash handed back in dividends or spent on buybacks, was 1.39x in 2025, only slightly better than the 1.31x average of the last 10 years.

Budden said investors should not mistake record payouts for a guarantee of durability even though current payout is “good”.

“Where buybacks dominate, distributions are only as reliable as the next profit cycle. Buybacks have their place, but dividends remain the truest measure of a company’s willingness – and ability – to reward its owners,” he said.