Thursday , January 21 2021

Profits in leading British companies reach a new record




Oil prices have risen in the last year (PA)
Oil prices have risen in the last year (PA)

Profits in companies listed on the UK stock exchange for the first time in seven years have reached a new record thanks to the high oil price, according to a new report.

According to studies conducted by The Share Center, the profits of British companies in the main stock market have reached 217.9 billion pounds in the last 12 months.

It breaks the highest record of all time in 2011.

All listed companies for the first time reached a record income of more than USD 2 trillion.

Despite the record result, the UK profits gain this year is expected to be lower than previously thought.

The market sees average or typical profit growth of 5.4% this year, from 6.7% three months ago.

Helal Miah, investment analyst at The Share Center, said: "Two cautious remarks are causing good news in the latest set of figures reported by British companies." First, most of the current earnings growth is of relatively low quality because it largely reflects the impact of higher prices crude oil that is beyond the control of individual companies.

"Secondly, the increase in profits focused on a smaller number of companies, which indicates that many companies find a challenge in terms of commercial terms."

Some of the biggest winners in the last 12 months have found themselves in the oil sector, which is the largest revenue generator in the UK stock market.

Oil prices rose from US $ 50 a year ago to around $ 80 in current trade, giving a huge boost to industries and companies like BP and Royal Dutch Shell.

Consumer goods and housing also achieved good results, while revenues from municipal services increased along with rising energy prices.

But the picture was less pink for the mining sector, which suffered as a result of global trade tensions. The industry has been the main engine of the growth of the British market, but in the last set of results, revenues were flat.

Meanwhile, well-publicized pressures on high street influenced the retail sector, in which profits dropped by 35%.

Mr. Miah added that the uncertainty associated with Brexit stops companies listed in the UK.

"It is also clear that the British stock market looks cheap compared to global peers and to the medium-term average," he said.

"The key factor is the uncertainty caused by Brexit, which caused slower economic growth, and international investors have reduced their weight to shares in the UK."

Press the Association


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