12 Feb 2018
Global growth and weak pound push profits to record high
According to new research, profits at UK-listed companies hit record highs in 2017, driven by a stronger global economy and a weaker pound.
The most recent Profit Watch report from The Share Centre studied the financial statements of the UK’s 350 largest listed firms. The report found that those companies reporting their annual results between October and December posted record sales and profits.
Revenues as a whole rose 12.6 per cent to a record £126.6 billion, with ten sectors recording rising revenues, and only one, the banking sector, seeing a fall.
The strongest growth noted were internally-focused companies as they got the most significant boost from the weakness in sterling. However, The Share Centre said even without exchange-rate gains as a contributing factor, many companies would have still booked record profits.
Pre-tax profits jumped 44.8 per cent to a new record of £11.2bn, with nine out of 10 companies boasting an increase. Among the top 100, pre-tax profits climbed by more than half, far faster than the next 250, but there was also a jump of almost a third for mid-caps.
Investment research analyst at The Share Centre, Helal Miah, said: “Whichever way you look at it, UK plc has performed well. Even without the added sheen of exchange-rate gains, we would have seen record-breaking results. Sales are climbing across the board, earnings are looking healthier still, and there is more to come.
“Fading exchange-rate gains in 2018 won’t hold back the UK’s largest companies. With the wider global economy in great shape, multinationals will profit from strong trading conditions in their overseas businesses, and manufacturers and exporters will enjoy rising demand for their goods.”
However, he added that domestically sensitive sectors, such as construction, seem to be on shakier ground.
“These depend more on investment into the UK and confidence in its economy. The high-profile collapse of Carillion, which had a large construction division, testifies to these pressures. Companies that depend on consumer demand at home are likely to see their profits underperform, as real incomes continue to fall.”