Revenues of the top 350 UK firms rose for the first time since 2013 last year, up 4.2 per cent on a like-for-like basis to £1.11 trillion.
The drop in the value of the pound following the Brexit vote “supercharged” UK plc results including multinationals and exporters, according to an analysis by The Share Centre. In 2016, the pound was around 13 per cent weaker on average against both the euro and the dollar.
However without sterling’s devaluation revenues would have fallen, the retail stockbroker warned. The top 100 firms saw the most significant boost from the weaker pound as two thirds of them reported results in dollars or euros.
The study also showed pre-tax profit margins for UK plc halved between 2011 and 2015. Oil and mining contributed the “lion’s share of the decline” as oil and commodity prices fell. In 2016, pre-tax profits rebounded 21.5 per cent on a like-for-like basis to £60.1bn, with one third of the increase coming from the weaker pound.
Helal Miah, investment research analyst at The Share Centre said: “The picture of UK plc’s health was heavily airbrushed by the positive effects of a weaker pound. For multinationals, the pound’s devaluation merely applies cosmetic improvements to their annual results. For others, there are real economic benefits if a company can serve foreign export markets from a cheaper UK base.
“When we peel back the veneer of exchange rate gains, recent results are nevertheless encouraging. Although top 100 firms are still struggling to grow sales, the sight of healthier operating margins is very welcome, and reflects an improved ability to manage costs.”