Pre-tax profits for UK plc jumped 13.7% in the third quarter of the year to reach a total £217.9bn for the past 12 months, breaking the all-time record last set in 2011.
According to the latest Profit Watch report from The Share Centre, revenues have risen for nine consecutive quarters, the longest period of expansion since the aftermath of the financial crisis in 2009, while profits have risen for six consecutive quarters.
The report also said pre-tax profits almost twice as fast as the 7.6% year-on-year increase in company revenue.
The oil sector was the largest generator of revenues, helped by the rising oil price to $80, and accounted for a quarter of the total revenue reported on an annual basis.
"Quarterly revenue from oil companies, including Shell and BP, jumped 27% year-on-year in sterling terms, accounting for almost two thirds of the overall growth in revenues reported by UK companies in Q3.
"The big jump in oil prices pushed oil profits up more than six-fold year-on-year, to their highest quarterly total since early 2013. The sector single-handedly accounted for the largest share of the growth in pre-tax profits generated across UK plc in Q3."
On the other hand, the mining sector has seen revenue flat year-on-year as global trade tensions have worsened. Despite this, profits were almost a third higher over the same period thanks to cost-cutting by companies. Retailers also struggled with every company in the sector reporting lower or flat profits as they competed with online rivals.
As a result of the impact of the miners, The Share Centre said it now forecast median earnings growth would be 5.4% this year, down from 6.7% three months ago, but was more positive on next year's figures with median earnings growth upgraded to 9.6%.
Helal Miah, investment analyst at The Share Centre, said: "Undoubtedly, investors should celebrate profits that have finally surpassed highs last seen several years ago, but this does show how long and slow the recovery has been. Moreover, it has come at the expense of profit margins, which seem to be structurally lower now than they were in the past.
"Two notes of caution leaven the good news in the latest set of figures reported by UK companies. First, the majority of current profit growth is relatively low quality, since it largely reflects the impact of higher oil prices, which are outside the control of individual companies. And secondly, profit growth was focused in fewer companies, indicating that many businesses are finding trading conditions challenging.
"There are, however, encouraging signs too. Many companies have worked hard to reduce their costs, and legacy issues are quickly becoming a thing of the past in crucial sectors like banking. Moreover, the market expects average earnings growth to pick up next year. What's more, analysts have upgraded forecasts for more companies than they have downgraded, so the improvement is not driven by just a handful of big stocks."
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