Company profits fell almost six per cent in 2014, a sign the economy is struggling and more interest rate cuts are likely.
Gross operating profits fell 0.2 per cent in the three months to December, much worse than the rise of 0.8 per cent the market was expecting.
Profits in seasonally adjusted terms were down 5.9 per cent in 2014, the Australian Bureau of Statistics said.
JP Morgan economist Tom Kennedy said the figures definitely add to the case for another interest rate cut from the Reserve Bank.
"Taken independently it wouldn't put too much pressure on the RBA, it's just another data print that is on the softer side of expectations," he said.
"Company profits were a bit weaker, which suggests that the hit from the resources sector was a bit more intense than what we would have thought."
There was also weakness in the utilities sector and in accommodation and food services, Mr Kennedy said.
St George senior economist Jo Horton said a rate cut is likely, but the RBA will probably wait to see what impact the February rate cut has on the economy before moving again.
"I certainly wouldn't rule out a rate cut tomorrow and we are expecting a rate cut in the first half of this year," she said.
"We would expect the RBA to hold off for a couple more months, probably until May when it will have a little more data at its disposal."
Ms Horton said there could be improvement on the way in profits for the mining sector.
"If we look at the mining sector it didn't have such a bad quarter for the December quarter, but if we look at the other quarters' profits there have been hurt by the decline in commodity prices," she said.
"The fall in the Australian dollar may provide some cushioning there, but we'll probably more likely see that in the March quarter."
Mr Kennedy said the December quarter's lower profits could also mean Wednesday's December quarter economic growth figures could be weaker than previously thought, although he has not changed his forecast of a rise of 0.8 per cent.
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