Companies’ 2025 Profits Coming In Short

Companies’ 2025 Profits Coming In Short

Summary

Chief Executive Research analysed responses from 1,030 companies (June–September 2025) and found widespread downward re-forecasting of 2025 profitability. Median expected EBITDA margin moved from 12% to 11.3%, with many firms showing material hits across every quartile. The report highlights both the scale of the 2025 profit shortfall and mixed expectations for recovery in 2026.

Key Points

1. Survey of 1,030 companies: one-third reforecast their 2025 profitability during H2 2025.
2. Median EBITDA margin fell from 12% to 11.3% for 2025.
3. Overall profit shortfalls: median companies likely to come in ~6% short; the average company ~13% short; average profitability expectations dropped 13.7%.
4. Top quartile projections down 12.5%; bottom quartile profitability plunged 64% (from a 7% forecast to 2.5%).
5. Outlook for 2026 is more optimistic overall: median EBITDA-as-a-percent-of-revenue is expected to rise ~9.4%, though the bottom quartile still faces a projected -2.4% change.
6. By company size: firms with $5–9.9m revenue expect a median 50% EBITDA increase in 2026; very small firms (<$5m) expect a further -13.9% decline; the largest enterprises (>$1bn) expect +14.8%.
7. Drivers of projected improvement include overhead trimming, product rationalisation, hiring restraint and greater use of AI/technology to boost productivity and margins.

Content Summary

The Chief Executive Group’s 2025–26 Financial Performance Benchmarks Report shows that 2025 was a tougher year for margins than many firms anticipated. Geopolitical shifts, tariffs, tight labour markets, higher interest rates and market volatility prompted a significant share of companies to lower profit forecasts. The median company’s expected EBITDA margin slipped modestly but meaningfully; the distributional effects are starker, with smaller and lower-quartile firms hit hardest.

Despite the 2025 downgrades, many CEOs expect improvement in 2026. That recovery is expected to be uneven: some firms (notably mid-sized and very large companies) anticipate sizeable margin rebounds, while the smallest firms and the weakest quartile may continue to struggle. Wayne Cooper of Chief Executive Network notes that cost cuts, product rationalisation and technology adoption (including AI) are helping many firms regain agility.

For full sector, size and ownership breakdowns and to benchmark your business, see the original Benchmarks Report linked below.

Context and Relevance

The piece matters for CEOs, CFOs and finance teams because it quantifies how widespread margin downgrades were in 2025 and signals where recovery might occur in 2026. The findings feed directly into planning, capital allocation and hiring decisions: companies still facing falling margins may need to double down on cost control, while those expecting rebounds should focus on capacity and customer demand timing.

It also ties into broader trends: persistent policy uncertainty, supply-chain stress and inflationary aftershocks have moved from one-off shocks to structural planning variables. The report gives executives benchmarkable metrics to compare their performance against peers.

Why should I read this?

Quick and blunt: if you care about margins, forecasts and where to focus strategy in 2026, this is worth five minutes. It tells you who got hit worst, who might bounce back, and why — so you can prioritise fixes (costs, products, tech) instead of guessing. We’ve read the heavy lifting — here’s the bit you actually need.

Source

Source: https://chiefexecutive.net/companies-2025-profits-coming-in-short/