New study shows
UK-listed companies reporting annual results between July and September saw sales and profits climb substantially, marking a third successive positive reporting period, according to the latest Profit Watch UK from The Share Centre.
UK plc revenues rose briskly for those top 350 companies reporting annual results by the end of September, up 17.3% to £113.1bn, the biggest jump in revenues in any reporting season since 2011. Half of the £16.7bn increase was down to BHP Billiton, which saw its revenues soar by two-fifths year-on-year, benefitting from a rebound in commodity prices and weaker sterling.
Yet, even without the BHP Billiton effect, UK plc revenues soared 11.5% year-on-year, still the fastest rate of increase in six years.
More than nine-tenths of companies grew their sales. Revenues among industrials climbed by a sixth, with strong sales supported by a weaker pound. Housebuilders saw a similar increase, with particularly strong growth from Berkeley and Redrow, while Sky boosted the media sector with solid sales growth, boosted by the weak pound.
Operating profit growth among the UK’s 350 largest companies leapt by 77.1%, thanks largely to BHP Billiton, which delivered a five-fold increase year-on-year. However, even without BHP’s contribution, operating margins across the rest of UK Plc were stable, as impressive profit growth of 11.7% matched sales growth.
Collective pre-tax profits saw an even stronger improvement. Those reporting saw their profits quintuple year-on-year. BHP again was influential, as its pre-tax result swung from a £4.9bn loss last year to a profit of £7.6bn this year. However, excluding the mining giant, pre-tax profits still shot up 17.1% to £9.5bn. This in part reflected strong trading, but was boosted by lower exceptional costs, as a wave of restructuring across a range of industries in recent years is now returning to more normal levels. More than two-thirds of companies and three quarters of sectors reported rising pre-tax profits, a very encouraging ratio, and one of the strongest in recent reporting periods.
Among the larger players, Diageo, Ashtead, and Barratt were star performers. Mid-cap housebuilders, financials, and industrials companies also traded well. By contrast, while the retail sector saw sales rise, partly on the back of new store openings, this came at the heavy expense of its profit margin. Pre-tax profits from Dunelm and Sports Direct plummeted by close to a quarter year-on-year.