British companies saw record profits in 2017 thanks to strong global growth and a weaker pound that helped boost export revenues.
The latest Profit Watch report from The Share Centre, published on Monday, showed that cumulative revenues from UK companies rose by 12.6% in 2017 to a record £126.6bn.
Internationally-focused companies boasted the strongest growth, thanks to an accelerating global economy and the weakness of sterling at the beginning of the year, which helped keep the cost of British exports low.
Nine out of 10 companies saw growth in pre-tax profits and 10 of the 11 corporate sectors examined saw a rise in revenues. Blue-chips outperformed the more domestic-focused mid-cap companies.
The report took its data from those companies reporting annual results between October and December - with financials being one of the best-performing sectors thanks to strong stock markets.
Exceptional gains from disposals and other one-off items helped boost profit at some companies, but over all the report said earning were high quality, reflecting "real operational improvement across UK Plc".
Helal Miah, investment analyst at The Share Centre, said: "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. 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."
Domestic growth fades
Domestically-focused companies, however, did not fare so well. The construction sector was a particular weak spot as Brexit uncertainties held back investment in new estate from corporates and civil engineering projects by the government.
The high-profile demise of Carillion proved testament to the troubles facing this sector, said Miah. Consumer-facing companies were expected to underperform in the coming year as the cumulative impact of higher inflation and low wage growth hit spending potential.