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UK Earnings Season Ends on a High

The UK earnings season has produced some good results for several of the country’s leading companies.

J Sainsbury, Barclays, BT and Vodafone all reported profits in their latest results. Sainsbury's fared best of all, reporting better-than-expected first-half results in November. The retailer recorded 32.6% growth in pre-tax profits, well ahead of analyst forecasts. At the same time, Sainsbury’s has predicted a pick-up in spending and announced an expansion plan to create 10,000 new jobs by March 2011. All of these factors played a part in the company's share price improving 3.24% (10.6p) on the day the data was released.

Vodafone also grew half-year profits, by 3.6%, but BT and Barclays saw their profits decline by 45% each. This despite both still registering profits of £547 million and £1.56 billion respectively.

Barclays attributed much of the decline to 'one-off factors', calling the positive result in difficult times a sign of resilience and diversification. Similarly, BT blamed much of its decline on increased redundancies, as the assumed cost of providing pensions rose dramatically in the UK. Vodafone, on the other hand, managed to cut costs significantly, achieving savings of £1 billion during the year, resulting in a slight rise in year-on-year profits.

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Earnings season always has the potential for volatility. And especially now, as economies crawl out of recession, companies are looking at innovative ways to cut costs and boost sales. These, inevitably, affect share prices. Our Monday Morning Briefing keeps you in touch with scheduled releases in the financial markets for the coming week.

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Updated: 19/11/09