Profits take a sharp dive at region's top 150 companies

But the report claims that the flexibility shown by Yorkshire firms makes them well-placed to benefit from the recovery.

The report, produced by accountants and business advisers BDO LLP, reveals that the region's top 150 companies saw operating profits fall by 54 per cent from 5.1bn to 2.3bn last year.

Profits after tax fell by 91 per cent to 0.3bn.

This is th e first time in five years that Yorkshire's top 150 have seen profits fall as the global financial downturn took its toll on the region.

Ian Beaumont, managing partner of the Leeds office of BDO LLP, said: "2009 was a year of tremendous structural change with significant debt being refinanced, new equity raised and balance sheets strengthened. We also saw some of the region's big names leave the top 150."

The most high-profile of these was buy-to-let mortgage lender Bradford & Bingley, which collapsed during the banking crisis after customers rushed to take their money out of the bank.

Mr Beaumont said that despite the tough conditions, 109 out of the top 150 remained profitable and 42 per cent of them actually increased profits in the year.

"Some key sectors also held up well, most notably retail, where the two biggest companies in the group increased their combined revenues by 3.2bn."

Bradford-based Morrisons and Leeds-based Asda had a stellar year, putting rivals Tesco and Sainsbury's in the shade. Further growth is expected this year as both supermarkets continue to roll out new stores and expand their non-food offering

Describing the food sector as an extremely important one for the region, Mr Beaumont said food companies saw profits rise by eight per cent.

Hull-based sausage maker Cranswick and Leeds-based ready meals company Northern Foods have managed to hold their own during the recession and look set to outperform once the recovery takes hold.

In previous years the report has noted that the area's strength comes from prudent management.

Mr Beaumont said that during the past year, this resilience has been tested as many of the top 150 experienced an extremely difficult trading period.

The construction industry suffered particularly badly, where the previous year's 1bn profit turned into a loss of 0.6bn, and the financial services sector saw profits halved while manufacturing profits were down by two-thirds.

Last year's Yorkshire Report predicted that mergers and acquisitions activity would suffer a cataclysmic shock and there would be very few deals taking place.

This was proved correct as the number of deals fell from 100 to just 24.

The region's largest companies effectively withdrew from major transformational acquisitions, and the deals that did take place were largely bolt-ons to existing businesses and almost all funded by debt and cash.

Mr Beaumont said: "In the short-term, banking sentiment has improved but remains cautious. I would expect to see deal activity return slowly but surely this year, but at more sensible and sustainable multiples than previously seen.

"Overall, I think the Yorkshire business community looks to the future with the same cautious optimism we have shown in the past. As the economic turmoil starts to settle down, we will begin to see a transformed business landscape."

He said the main obstacle would be the mountain of national debt affecting Yorkshire businesses' growth prospects but the region had a good mix of businesses and he believed the top 150 had the resilience to come through.

Stuart Hall, chief financial officer of Pace, who provided the finance director's statement said: "Trading conditions have been undoubtedly tough, but it's encouraging to see many Yorkshire companies maintaining and growing revenues in 2009.

"The challenge for 2010 will be to drive further efficiencies in order to translate top line growth into increased profits."

Figures tell the story

The 2010 Yorkshire Report is compiled by BDO's accountants and business advisers by aggregating the figures from the latest available accounts of the region's top 150 businesses.

David Forbes, managing director of Rothschild, has provided the chairman's statement within the report, and Stuart Hall, chief financial officer of Pace, has written the finance director's forword.

BDO has a global network of 1,095 offices in 110 countries. More than 44,000 partners and staff provide business advisory services throughout the world.

Copies of the 2010 Yorkshire Report are available by sending an email to [email protected]