7 months ago
H1 2025 earnings review: What’s driving U.K. corporate performance
Investing.com -- The first half of 2025 showed an improvement in U.K. corporate earnings, with financial firms leading growth while energy companies continued to weigh on results, as per Deutsche Bank Research in a recent note.
FTSE 100 earnings fell 2% year over year in H1, a smaller decline than the 5% drop recorded in the second half of 2024. Excluding energy, earnings rose 5%.
About 70% of companies beat expectations, delivering an aggregate earnings surprise of 5%.
Sequentially, earnings grew 7% compared with late 2024, supported by stronger GDP growth and easier comparisons.
Financials and industrials were the largest contributors to gains, while energy and basic materials were the weakest.
Sales fell 1% year over year but still beat forecasts by 2%, helped by financials and consumer discretionary firms. Margins expanded as earnings outpaced sales.
Guidance from U.K. corporates was generally steady, though more firms upgraded than downgraded forecasts.
About 27% of companies raised guidance, compared with 8% issuing downgrades, with most of the upgrades coming from financials, staples and industrials.
For the full year, consensus still expects FTSE 100 earnings to decline 2%, or increase 2% excluding energy, the brokerage said.
Estimates remain well below pre-2024 trade deal levels despite the U.K. economy expanding by 0.3% in the second quarter, making it the second fastest-growing G7 economy in the first half of the year.
Deutsche Bank expects FTSE 100 earnings to rise nearly 2% in 2025, noting that consensus may prove cautious given stronger GDP data and easing trade uncertainty.
In the FTSE 250, where only about a third of companies had reported, earnings grew 5% year over year and beat expectations by mid-teens on aggregate. However, much of that strength came from Ocado (LON:OCDO).
Excluding the company, earnings declined 3% and missed estimates by mid-single digits. Staples and technology provided the strongest support, while consumer discretionary and basic materials weakened performance.
The consensus expects low-teens earnings growth in H2 for the FTSE 250, with 8% growth for small- and mid-cap firms and a 2% drop for large companies.
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