YORKSHIRE’S biggest companies must prioritise exports to emerging economies to compensate for weak domestic and European demand, according to the authors of a new report into the region’s competitiveness.
Despite recent big improvements in profitability among Yorkshire’s 150 biggest companies, new figures show they generate only 11 per cent of revenues outside domestic markets – some £9.4bn.
The Yorkshire Report 2012 found the top 150 firms raised pre-tax combined profits to £3.3bn from £1.9bn a year earlier, according to their most recently published and collated financial statements.
Combined revenues were up five per cent to £83.8bn, said the study by accountancy group BDO.
“This has been a solid year of financial progress for the top 150, which will be welcomed by businesses across the region,” said Ian Beaumont, partner and head of BDO in Leeds.
“Companies now seem to be on much firmer footing and the challenge is now to create a springboard for further growth.
“The big thing for the region is how is it going to prioritise its resources to compete in a world market.”
The report, now in its sixth year, provides an insight into the collective power of Yorkshire’s biggest companies. It collated data from annual results up to the end of March 2011 – the most recently available comprehensive figures.
Growth in exports has been trumpeted by the Government as key to Britain’s recovery. Prime Minister David Cameron recently returned from a trip to Asia where he aimed to expand trade links with Japan, Malaysia and Indonesia.
The value of goods destined for Europe rose by more than a third to £4.4bn, compared with £3.3bn a year earlier. Revenues from Asia and Africa were a combined £214m versus £316m a year earlier, claimed the study.
“One of the things that worry me about the report is that our exports into growing regions have never increased,” said Mr Beaumont.
“But at some point businesses need to look for growth markets and niches.
“If we’re still playing around in Europe we’re in a low-growth environment. We need to start exploring the BRICs – Brazil, Russia, India and China.”
The study found 117 of the companies made a profit, up from 105 a year earlier.
Retailers, led by Leeds-based Asda and Bradford’s Morrisons, were the largest contributors to revenues and profits, with combined earnings of £1.15bn.
The construction sector fared worst, with losses of £16m. However, this was an improvement on the £84m losses a year earlier.
The combined workforce of the 150 companies increased to 469,000 from 460,000 the prior year. However, spending on property, plant and machinery fell 20 per cent to £2.4bn, which Mr Beaumont said “raises concerns about future growth potential”. “Without increased investment, businesses may struggle to compete on the international stage or take advantage of growth opportunities,” he said.
The report found West Yorkshire is home to more than half of the largest companies in the region, followed by South Yorkshire with 21 per cent, North Yorkshire with 14 per cent and East Yorkshire on 11 per cent.
Leeds was the most represented city with 21 per cent of companies. Sheffield was home to 12 per cent and Bradford ten per cent.
Paul Fullerton, ex-Bank of England Agent for Yorkshire and the Humber, who chaired the report, said: “It’s vital that Yorkshire, having faced the dark depths of recession and emerged in reasonable shape, looks beyond its traditional base to find and invest in new opportunities and markets.
“Having got firmly back on our feet, the challenge now is to create a springboard for growth.”
The report aims to showcase the region’s strengths but also highlight its weaknesses, said Mr Beaumont. “It’s trying to look beyond individual businesses. There’s a collective power that’s quite impressive.
“Yorkshire is at a really defining moment. In my view the fact that local enterprise partnerships have replaced regional initiatives has been a negative for Yorkshire.
“It should not be Leeds, Hull, Bradford and Sheffield – we should be competing as a region against Germany and Turkey.”