UK top 350 companies’ profits slump 30%

Britain mapProfits after tax fell at the top 350 companies in the UK by almost 30% to £114.5 billion (€134.2 billion) last year, even though sales “inched ahead”, according to The Share Centre. Profit margins were the lowest posted since 2009, suggesting that companies failed to pass on rising costs of all kinds to their customers. The Share Centre’s quarterly report, Profit Watch UK, says that although revenues rose by 2.1% to £2.07 trillion, they failed to even beat inflation at 2.8%. This was the slowest rise in revenues in five years. The 29.7% slump in profits has been attributed to pricing pressure and rising costs that hit margins. While the squeeze was spread across sectors, larger companies suffered more. This was particularly visible among the index heavyweights: miners, oil producers and financial companies. The report says falling commodity and energy prices made revenue growth hard to achieve, while the banking industry saw weak lending affect its top line. At the same time, costs rose sharply and there were sizable write-downs by miners and banks. Helal Miah, investment research analyst at The Share Centre, says: “Given the headwinds in the largest industries, revenues are likely to remain under pressure, but profitability should improve.” ©2013 funds europe

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