Belfast Telegraph

Economic slowdown drags FTSE firms to weakest performance in three years

Brexit uncertainty and trade tensions weighed on UK companies, according to the Share Centre’s latest Profit Watch UK report.

A view of the The Walkie Talkie Building (20 Fenchurch Street, right), and The Cheesegrater (the Leadenhall Building, centre) as seen from the viewing deck of the Blavatnik Building, Tate Modern, London. FTSE firms had their weakest performance for three years in the second quarter of 2019 according to new figures (PA)
A view of the The Walkie Talkie Building (20 Fenchurch Street, right), and The Cheesegrater (the Leadenhall Building, centre) as seen from the viewing deck of the Blavatnik Building, Tate Modern, London. FTSE firms had their weakest performance for three years in the second quarter of 2019 according to new figures (PA)

Listed British firms posted their weakest performance in three years over the last quarter as the economic slowdown took its toll, data has revealed.

Brexit uncertainty and trade tensions weighed on the UK’s biggest public companies, according to the Share Centre’s Profit Watch UK report for the three months to June.

The retail stockbroker’s analysis revealed that a third of FTSE 350 companies posted lower sales in the second quarter.

Firms saw revenues inch up 1.6% for the period, but growth was largely sustained due to the devaluation of the pound, amid traders’ concerns over the increased likelihood of a no-deal Brexit.

Average bottom lines also improved, moving 3.1% higher, although analysts at the Share Centre again highlighted that this was “only made possible by a lower exchange rate”, which boosted the value of revenues and profits from overseas.

Without this positive effect, sales and profits would have been slightly lower year-on-year, it said.

However, strong growth in revenues and profits among the country’s 40 largest listed companies helped to boost the figures, with smaller firms reporting a decline in revenue for the first time in five years.

The 40 largest firms also reported significantly larger than average profits, while more than half of the companies reported lower profits.

“The slowdown in the world economy, compounded by a deteriorating picture at home, meant UK plc posted its weakest set of growth results in three years in the second quarter of 2019,” the report said.

“The top-line performance was poor for larger and smaller companies alike.”

Analysts have slightly pulled back stocks forecasts for the rest of the year, with median earnings growth forecast to be 3.9%, a cut to the outlook from March.

PA

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