UK plc’s profits hit post-crisis low
The companies in the FTSE 350 – comprising Britain’s blue-chips and mid-caps – notched up pre-tax profits of £84bn in 2015, down 38% on the previous year.
Last year was a torrid one for UK plc, says City AM's Jake Cordell. The companies in the FTSE 350 comprising Britain's blue-chips and mid-caps notched up pre-tax profits of £84bn in 2015, down 38% on the previous year and the worst annual tally since 2008. Back then, the 350 earned £99bn. Sales declined for the third year in a row in 2015, falling by 10.5% to £1.64trn.
The fall was largely due to the oil, mining and financial sectors, which have been hit by the commodities slump and volatile markets. They comprise 40% of the FTSE 350's sales. The bounce in raw-materials prices may bode well for this year, but with miners and oil firms crucial to income investors, it comes too late to prevent forecasts of a decline in UK dividends in 2016.
Global dividends on the rise
According to HendersonGlobal Investors, whichhas been monitoring 1,200firms worldwide since2009, global dividendsedged up by 2.2% year-on-yearto $218bn. For 2016 asa whole, it expects globaldividends of $1.18trn,an increase of 3.3%. Itsindex tracking worldwidedividends since 2009 isclose to its 2014 peak.
Japan, Europe and NorthAmerica led the advance in the first quarter; the latteraccounts for 60% of globalincome from shares. Inthe UK, however, payoutsdeclined by 5% year-on-yearin dollar terms, dueto the pound's weaknessagainst the greenback. Onan underlying basis theyclimbed by 0.7%.
This year, too, will be astruggle for dividend seekersin the UK, thanksto the heavy weightingof the ailing commodityand banking sectors.Cuts announced by theseindustries "will bite deeperlater in the year", BenLofthouse of Hendersontold the Financial Times.