Listed British firms posted their weakest performance in three years over the last quarter as the economic slowdown took its toll, data has revealed.
According to the Share Centre’s Profit Watch UK report for the three months to June, the ongoing US-China trade war, together with Brexit uncertainty, weighed on the UK’s biggest public companies.
The retail stockbroker’s analysis revealed that a third of FTSE 350 companies showed lower sales in the second quarter of this year.
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 have also improved, gaining some 3.1%, driven by the top 40 multinationals which performed strongly.
Nevertheless, analysts at the Share Centre again highlighted that this was “only made possible by a lower exchange rate”, boosting the translated sterling value of revenues and profits from overseas.
It is believed that without this positive effect of the fall in the value of the pound, both sales and profits would have been slightly lower year-on-year.
Profits for those outside the top 40 dropped by a third, making it the fifth consecutive quarter of declines.
Additionally, for the first time in five years, those outside the leading pack were hit by a slump in revenues, showing that these companies tend to have greater exposure to the domestic UK market and economy.
“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.