Pre-tax profits similarly soared to new heights, collectively jumping 44.8% on a LFL basis to £11.2bn.
Notably, “growth was broadly based”, across these two key financial metrics, The Share Centre indicated. Ten sectors reported growth in revenue, compared to just one – the banking sector – in which sales fell. Similarly, nine-tenths of the companies reporting raised their pre-tax profits over the period.
There were some outliers though. Low cost airliner easyJet brought in lower profits despite higher passenger numbers due to more expensive fuel costs coupled with the weak pound, for instance. And domestically focused businesses like JD Wetherspoon and WH Smith saw comparatively sluggish sales growth.
Unsurprisingly, the international earners comprising most of the top 100 firms, saw the most accelerated growth thanks to positive foreign exchange movements. Pre-tax profit among the 100 largest corporates collectively leaped by more than half.
The biggest company in The Share Centre’s list, contract caterer Compass, which derives 90% of its sales from overseas, saw its revenues grow 15.1% in sterling terms. On a constant currency basis, however, revenue growth was about 4.1%.
However, The Share Centre’s investment research analyst Helal Miah cautioned that the positive effects from a weaker pound should start to dissipate toward the back end of the year. In particular, this will likely serve as a headwind for the more domestically focused companies, such as those in the construction sector and those that depend on the increasingly squeezed consumer.
Still, “whichever way you look at it, UK plc has performed well”, said Miah. “Even without the added sheen of exchange-rate gains, we would have seen record-breaking results. Sales are climbing across the board, earnings are looking healthier still, and there is more to come.
“Fading exchange-rate gains in 2018 won’t hold back the UK’s largest companies,” he added. “With the wider global economy in great shape, multinationals will profit from strong trading conditions in their overseas businesses, and manufacturers and exporters will enjoy rising demand for their goods. Domestically sensitive sectors, such as construction, seem to be on shakier ground. These depend more on investment into the UK and confidence in its economy. The high-profile collapse of Carillion, which had a large construction division, testifies to these pressures. Companies that depend on consumer demand at home are likely to see their profits underperform, as real incomes continue to fall.”