Asset management is one of the hardest hit sectors in the UK in terms of profitability, an analysis of UK plc performance shows.
The Share Centre’s ‘Profit Watch’ showed that out of 20 sectors, 11 saw falling profits in the first quarter with asset managers, industrials and general retailers “notably hit hardest”.
In general, profits are “increasingly hard to come by” for UK companies outside of the largest 40 listed firms, the Share Centre said.
For the first quarter, profits for the UK’s largest 40 companies grew 11.2%, but for other listed groups in the research outside the 40, profits fell by 17.6%.
Overall pre-tax profits from UK plc grew in the first quarter for the tenth quarter in succession, but they expanded by “only” 4.4% compared to the same period a year ago. This slowdown came after a prolonged succession of recent quarters where profits grew at double-digit rates, the Share Centre said.
In the top 40 the oil sector, miners and the building materials and construction sector were the biggest gainers in pre-tax profits.
Almost half of companies outside the top 40 saw profits fall year-on-year, compared to only a quarter of those in the super-league.
Richard Stone, chief executive of The Share Centre, said: “UK plc profits are growing and that’s a good thing. The rate of improvement is decelerating as wider global economic trends are becoming less supportive, however, and the market is slowly reducing forward-looking expectations as a result.”
The one-sixth drop in profits for those outside the top 40 was exaggerated by big losses at a handful of companies, Stone said, but even without the more extreme cases they still underperformed.
“Sharp declines in profit like those in the latest quarter are unlikely to repeat in our view, but there is work to be done to reverse the margin squeeze being felt across a number of sectors. This narrowing of profit growth to fewer and fewer companies is common late in the economic cycle.”
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