UK PLCs suffer ‘worst quarterly results in years’
The UK’s publicly listed companies have suffered their worst quarter on average in nearly three years, according to a new report.
More than half of UK firms listed on the main market have reported lower profits for the second consecutive quarter, collectively falling 4.5 per cent in the first drop since 2016.
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Over three fifths of sectors in the third quarter endured declines, the largest proportion in at least the last six years.
The Share Centre, which compiled the data, said that the figures indicated that the UK’s public limited companies “have entered an earnings recession”.
Revenue growth climbed 4.6 per cent during the quarter.
However, the report said this “was not only below the average for the last three years, but was also of rather low quality – approximately two thirds of it was down to the flattering effect of Sterling’s weakness”.
Over the past 12 months UK plc profits have totalled £189.7bn, down 1.6 per cent when compared to the same figure three months ago.
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“The UK economy may have avoided a technical recession over the last few months, but listed company earnings have not,” said Helal Miah, an investment research analyst at The Share Centre.
Miah added: “The narrowing of collective profit growth onto fewer and fewer companies in recent quarters has finally run its course, exposing a margin squeeze that has spread out across most sectors and companies.
“While there isn’t a single factor to blame for the UK PLC earnings recession, Brexit, the slowing global economy and structural changes in retail are undoubtedly key contributors. Profit declines could have been worse were it not for the cushioning impact of a weaker Sterling on overseas earnings.”