Furture profitability

One would like to think that someone involved in the Financial world would have rudimentary math skills. However, I hear comments that effectively convince me otherwise. Today I heard a commentator on a business channel say while companies had achieved profitability by cost cutting, the market was pricing in a 25% profit increase next year and she didn't believe sales would increase by that amount.

Now, maybe she didn't mean to express it quite like that but clearly if you have reduced costs and therefore productivity, you can achieve substantial increases in profits with relatively small increases in sales.

For example, lets say that a company is in retail and normally marks up goods 100%. It doesn't achieve a 50% profit rates because the cost of running the business eats up a significant percentage. Lets say that the profit rate is actually 10%, so for every dollar of sales, 50% goes to procure the goods and 40% goes to the cost of running the business. Now saw the total business sales are a billion dollars so profit would be 100 million. Now if sales increase by 10%, the question is would associated costs have to increase also? Probably not since the retailer would be reluctant to increase costs without a greater impetus. So theoretically the 100 million in increase sales would produce 50 million profit. Now that would increase profits by a full 50% but of course, some increases in variable costs would occur so lets assume half of the business cost is variable and, such as overtime and would increase proportionately. So profits would increase by 30 million leading to a 30% increase in profit on a 10% increase in sales.