Top British firms suffer sharp decline in profits
Research finds that big write-downs at Vodafone and Tesco helped overall profits fall by a third
LEADING British companies saw profits slump by 33.8 per cent in the year to March despite a rise in revenues. According to the Financial Times, Britain's largest public companies have been struggling with slow top-line growth and weakening margins.
In the 12 months up to the end of the first quarter, 62 of the country's biggest firms earned total revenues of £360.4bn, up from £346.4bn in the previous year. However, they managed to generate only £16.6bn in profit after tax, a sharp fall from £25.1bn the previous year.
Research by The Share Centre, which looked at the FTSE 350 companies whose financial years end in March, found much of the overall fall could be attributed to big write-downs by Vodafone and Tesco.
Vodafone wrote down almost £6bn from its operations in economically troubled countries in southern Europe, while Tesco took a total £2.3bn of write-downs - £1bn of which came as a result of its unsuccessful Fresh & Easy venture in the US.
Helal Miah, a research investment analyst at The Share Centre, said "some big one-offs have made profits seem worse than the broad spread of results would show." However, even discounting Vodafone and Tesco, the results for UK plc were very poor, said Miah.
Like-for-like sales rose by only one per cent among FTSE 350 companies in the year. Miah said the small growth was well behind inflation and "meagre at best". ·