12 May 2014 10:39
AIM: SHRE
Share plc
("Share" or "the Group")
Publication of latest "Profit Watch UK" report
Share, which operates The Share Centre Limited, a leading independent UK stockbroker, is pleased to announce the publication of its latest quarterly issue of "Profit Watch UK", which analyses the revenues and profitability of the top 350 UK listed companies. The report examined the financial results of companies with year ends in the fourth quarter of 2013 and which reported results in the quarter to 31 March 2014. A full copy of the report can be found on The Share Centre website at https://www.share.com/experienced-investors/profit-watch-uk.
In its summary, the Profit Watch UK report notes:
Growth is broad-based - twice as many sectors see sales rise (24) as they do fall (12)
Annual revenues of companies analysed in the report show that mid-caps moved at a different pace entirely to the top 100 listed companies in the quarter, benefiting from their greater exposure to the strongly recovering domestic economy rather than global trends. While the top 100 listed companies saw revenues slip 2.5% to £1.38trn year-on-year, the mid-cap 250 rose 9.7% to £130.2bn. This outperformance continues throughout the profit and loss account of UK plc, with mid-caps reporting net profit growth of 25% (35% if adjusted for index changes), compared to a decline of 8.8% in the 100.
International commodities companies suffered from weaker global economic conditions, lower prices for energy and raw materials, and a strong pound. They made up half of all the UK plc's revenues reported in the period and so had a disproportionate impact on headline figures. They saw their collective revenues shrink by 1.5% to £1.51trn and gross profit fell 3.9% to £225.7bn. Their performance wiped £47.7bn off UK plc's top line in the quarter, with Shell alone seeing revenues decline £19.3bn.
At sector level, evidence of a broad-based recovery is clearer. In the quarter's set of annual results, 24 sectors saw revenues rise, versus 12 that saw them fall. Housebuilders were the stand out performers (+12.9%), alongside automobile and parts sales (+9,4%) and general retailers (+7.4%), pointing towards a more confident consumer. At operating profit level, the number of risers outnumbered the fallers (16:13). The number of sectors with rising net profits equalled the number of sectors with falls - a strong improvement on a year ago when 15 saw profits rise compared to 20 that saw profits fall.
Commenting on the findings of the report, Helal Miah, investment research analyst at The Share Centre, said,
"It's fair sailing ahead for the economy, but investors must look beneath the surface for evidence of UK plc's burgeoning growth. Commodities companies dominate the index, and the battering they have taken from the global headwinds of weakening growth, cheap US-produced energy and economic weakness in emerging markets has obscured the wider picture. With the pound soaring against the dollar over the last year, it's even harder for these firms to report growth in sterling terms.
"A growing number of sectors are demonstrating climbing sales and profits, and companies with greater domestic exposure have been best placed to ride the wave of economic recovery. With the IMF now forecasting growth of nearly 3% this year, the fastest in G7, there is every reason to expect more positive earnings growth on the horizon.
"Looking back at 2013, it's clear that a solid overall sales performance - in spite of the drag from commodities - has not been translated into British firms' bottom line. Revenues in the 350 are now 44.6% above their 2007 peak, but profits are nearly a quarter lower. We can't expect a return of the unsustainably high profits we saw in the last boom - especially in the financial sector - but companies should now have finished cleaning up their accounts, meaning they are well placed increase their profits quite sharply from here."
For further information please contact:
Share plc | ||
Gavin Oldham, Executive Chairman | 01296 439 100 | 07767 337696 |
Richard Stone, Chief Executive | 01296 439 270 | 07919 220599 |
Stephanie Reynolds, PR Manager | 01296 439 256 | |
KTZ Communications | 020 3178 6378 | |
Katie Tzouliadis Deborah Walter |
Notes to editors
Methodology
Raw data from the financial reports of the UK's largest 350 listed firms (provided by Factset, excluding equity investment trusts) was analysed and cross referenced with additional data from the London Stock Exchange. The researchers compiled the data for the whole market and analysed by sector and index.
This report analysed financial data for companies with year ends up to 31 December 2013 and which reported up to 31 March 2014.