UK public companies post worst performance in three years in second quarter
UK companies posted the weakest set of results in three years in the second quarter of 2019.
Analysis from the Share Centre shows revenues for UK public companies increased 1.6 per cent in the second quarter.
Profits rose 3.1 per cent, driven by the top 40 multinationals which performed strongly.
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The fall in the value of the pound boosted the translated sterling value of revenues and profits earned overseas.
Without the fall in the value of the pound, both sales and profits would have been slightly lower year-on-year.
Profits for those outside the top 40 dropped by a third, the fifth consecutive quarter of declines.
More than half of companies reported lower profits and a third of companies reported lower sales.
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The top 40 managed to grow revenues slightly, but those outside the group were hit by a slump in revenues for the first time in five years.
Companies outside the leading pack tend to have a greater exposure to the UK economy
Richard Stone, chief executive of the Share Centre said: “Profit growth has become increasingly dependent on a narrower group of companies over the last year. The increasingly sharp divergence between the multinationals and those more dependent on the domestic UK market is part of this picture.
“The market’s expectations for earnings growth this year are still achievable but for the year after optimism seems too high in our view, given the current slowdown in the world economy and uncertainty in the UK over Brexit. Moreover, any recovery in the pound would act as a significant drag on growth.”