Big firms slow to cash in on GDP recovery as FTSE 100 profits fall
Profits at Britain’s biggest businesses are falling despite the economic recovery, as firms are holding down prices even as the outlook for GDP improves.
The FTSE 100’s gross profits fell 1.2 per cent in the first quarter, compared with the same period of last year, according to analysis from The Share Centre.
Like-for-like sales dipped to £60.2bn, even though unemployment is plunging and the economy booming.
By contrast, FTSE 250 firms registered a 5.1 per cent rise in gross profits over the same period.
“While revenues are showing promising – if modest – growth, they are not keeping pace with costs.,” said The Share Centre’s Helal Miah.
“It’s mainly a problem for the large caps though. Midcaps are reaping the benefits of growth in the domestic economy, while their larger counterparts are more exposed to foreign markets, and to the exceptionally strong pound, the strongest currency in the world in the last year.”
Some of the hit came from Vodafone, where profits have fallen since selling its stake in US giant Verizon.