The UK’s largest listed companies weathered a difficult political and trading climate last year, posting upbeat results in the final quarter of 2016.
Fourth quarter revenues increased by 5.5 per cent on a like-for-like basis, reaching a record of £116bn for the listed companies.
Operating profits grew at their fastest rate in the last three years, totaling £10.6bn, and representing a rise of 5.6 per cent year-on-year. Three-quarters of the firms saw sales rise off the back of the weak pound.
Analysts from the The Share Centre used fourth quarter data from firms listed in the FTSE 350 to compile a new report, which they say shows UK plc has proved resilient to global shocks and is responding a more positive outlook for 2017.
Five companies were responsible for almost half of the percentage growth in revenue, including the catering group, Compass, tobacco giant Imperial Brands, and the airport and railway station food group SSP.
Imperial Brands (formerly Imperial Tobacco Group) saw revenues grow by £1.4bn while an overall fall in pre-tax profits of 2.6 per cent among the FTSE 350 was attributed to the performance of just three companies.
A weaker pound was credited with the strong performance from companies in the FTSE 350, many of which trade in foreign-denominated currencies and see much of their sales taking place overseas. An anticipated increase in oil prices, and greater rewards from research and development efforts at the major pharmaceutical firms, will likely result in this group of companies showing good results again this year, The Share Centre said.
Helal Miah, an investment research analyst at The Share Centre added a cautionary note: “The UK economy itself is still unaffected by the coming divorce from the EU, and continues to enjoy policy support from the Bank of England. But costs are rising fast, reflected in sharply higher inflation, which could impact on margins for domestically orientated companies.”
“Uncertainty over the UK’s future trading relationship with the EU could depress corporate investment too, acting as a longer-term drag on growth.”