EquityAug 14 2017

FTSE 350 company profits rise at fastest level since 2012

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FTSE 350 company profits rise at fastest level since 2012

Better sales and margins powered profits at FTSE 350 companies to their best profit performance since 2012, data released today (14 August) by the Share Centre has revealed.

Companies reporting between April and June this year posted operating profits of £22.7bn, an increase of 41.3 per cent.

One company, Vendata Resources, a global mining company headquarted in London, accounted for two thirds of this increase by swinging from a £3.3bn loss last year to a £1bn profit.  

Operating profits grew faster than sales for FTSE 350 companies as a whole, indicating margins have improved. There was also a drop in one-off items and impairments hitting profits.

Just one in twenty companies reported a loss during the period, compared with one in nine in both 2015 and 2016.

Mid-cap companies outperformed their large cap peers for the fourth reporting season in row.

Sales by companies in the FTSE 250 - which consists of the 101st to the 350th largest companies listed on the London Stock Exchange - rose 8.3 per cent compared to 5.2 per cent for firms in the FTSE 100.

This outperformance was seen in profits too; pre-tax profits rose a respectable 11.9 per cent in the FTSE 100, while mid-caps on the FTSE250 soared seven fold to £5.6bn.

The turnaround at Vedanta was a driving force behind the growth in mid-cap profit, but performance was good across the board, as they benefited from the relative strength of the economy and consumer during the twelve months to the end of March 2017.

Despite this positive news, Francis Brooke, who runs the £3.4bn Troy Trojan Income fund, said “winners in the stock market are hard to find right now”.

He noted that in the month of June, "only twenty share prices in the FTSE 350 index rose by over 5 per cent in the month".

"By contrast over one hundred share prices fell by over 5 per cent in June and, as we always say, it was more important to ‘avoid the torpedoes’ than find the winners. This cannot always be achieved”.

The Troy Trojan Income fund has returned 35 per cent over the past three years, compared with 27 per cent for the average fund in the IA UK Equity Income sector in the same time period.