Companies ‘are in best shape for two years’

Consumers bought new homes and booked holidays, boosting airlines, travel companies, housebuilders and estate agents. TUI Travel, easyJet and Bellway Homes were singled out by the online stockbroker, reports The Times.

Companies such as Compass and Wolseley, which sell their wares in the United States, also did well, thanks to the relative health of the world’s biggest economy and the strong dollar.

Overall, operating profits were up by 5.5 per cent to £10.1 billion on a like-for-like basis in the final quarter of last year, the fastest growth in any quarter for two years. The falling prices of oil and gas and the vicious price war between the traditional supermarkets and the discounters dragged down the result.

Smaller companies outperformed the FTSE 100 because their domestic focus helped to insulate them from global turmoil, the Share Centre said. The mid-cap groups reported operating profits up 11.9 per cent, almost four times the 3.6 per cent rise shown by the FTSE 100 constituents. Overall, revenues rose 0.4 per cent to £108.3 billion during the period.

The rising profits came despite near-flat sales growth, suggesting that Britain’s biggest listed companies are increasing volumes and cutting costs.

Helal Miah, an investment research analyst at the Share Centre, said: “With a handful of very large and very high-rofile companies suffering simultaneous pressure on their profits, it’s easy to overlook excellent growth elsewhere in the economy. The latest set of results from UK plc shows there is lots to be cheerful about.

“While the impact of global headwinds will continue to dominate the headlines, companies exposed to the UK consumer are broadly painting a different picture altogether for investors.”