Global profits grew strongly in 2025, reaching a projected record US$4.85 trillion for the world’s largest 1,600 listed companies, up 12.2% year-on-year, according to Profit Watch – part of the Capital Group Global Equity Study.
Revenue growth explains just under half the growth in profits in 2025. Companies made projected total revenues of US$44.2 trillion in 2025, up 5.3% year-on-year.
Around one third of the increase in profits came from lower one-off costs, while favourable exchange rates were also a factor. This is low quality growth that does not indicate sustainable value creation, but even without this artificial boost, earnings outstripped sales growth by around three percentage points indicating strong progress, Capital Group’s Profit Watch shows.
This margin expansion is part of a long-term trend and is evident across most sectors and in most parts of the world. Earnings growth of 143% since 2015 has outstripped revenue (up 69%) meaning companies have turned more of their sales into profit.
Most of the money companies are making in profits and generating in free cash flow is being returned to shareholders either via dividends or share buybacks.
The report projects total dividends and share buybacks for the top 1,600 companies at US$3.50 trillion in 2025, up 7.7% year-on-year, double their level as recently as 2016.
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. A similar picture emerges when looking at all-important cash-flow measures.
Christophe Braun, Equity Investment Director at Capital Group said: “Profits, cash flow and shareholder distributions have all doubled since 2016, 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. 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. For investors, this underscores the importance of focusing on companies with durable profitability and strong fundamentals. In an environment where growth is uneven, the importance of an active manager, like Capital Group, who undertakes deep company research, careful navigation and selectivity can matter more than ever.”
KEY SECTORS
The key drivers of 2025’s profit growth were the technology and media sectors, particularly in the US, Taiwan and China. Profits rose by close to a third and a quarter respectively, boosted by lower one-off costs. Overall, technology companies, especially semiconductor manufacturers, delivered one third of the world’s earnings growth in 2025.
Among other sectors, financials and healthcare also delivered strong growth, energy profits were flat, and consumer cyclicals saw profits fall due to weakness among car manufacturers worldwide. (See report for sector detail)
KEY REGIONS
UK: In the UK, data from interim and quarterly results for 2025, along with analyst projections suggest revenues rose at a similar pace to the global average, while profits recovered significantly. UK companies in the index2 made projected profits of US$170.1 billion in 2025, up by a third year-on-year, driven partly by growth from financials and progress within the industrials sector. This improving picture follows a period of flatlined revenues between 2022 and 2024 due to weaker commodity prices in mining and energy.
In terms of payouts, at 1.34x in 2024, UK cash flow cover of dividends and buybacks (which excludes financials) was slightly above the global average and is likely to have remained so in 2025. This indicates that UK companies are comfortably generating enough cash to fund their payouts.
Among other major nations, the US and Canada saw some of the strongest profit growth in 2025. In the US, this growth was and remains heavily reliant on a handful of large companies, while the banks are providing more than half the growth in Canada. In the Pacific, chip makers are driving profits higher in Taiwan and Korea. Japan is in the middle of the pack, with diverging fortunes across its major companies. Meanwhile, troubled car manufacturers are keeping Europe in the slow lane, masking better growth elsewhere. (See report for country detail).
