Revenues ease but profits jump as 9,000 staff are axed

JOB cuts helped profits at Yorkshire’s top 150 companies bounce back despite weak demand, a report reveals.

A study by accountancy firm BDO showed the group of the region’s biggest-hitters made a pre-tax profit of £1.9bn, up from £1bn.

It came at a human price, however, with the group’s workforce shrinking from 469,000 to 460,000, according to the Yorkshire Report, which looks at the annual performance of firms according to figures filed at Companies House. The firms featured had year-ends across the 12 months to March 31 2010. Revenue was down slightly to £79.7bn, a drop of 0.9 per cent.

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“Weak demand, driven by a sickly recovery that hit consumer and business-spending, made maintaining revenue an uphill task,” said John Swarbrick, senior director at Lloyds Development Capital, in a “chairman’s view”.

“Although the battle for revenue could be deemed a draw, there was no such ambiguity with profits. The group’s focus on the old-fashioned virtues of thrift and strong management helped to keep a firm lid on costs.”

Referring to the cost-cutting that wiped out 9,000 jobs and hit director pay by an average of nearly six per cent, he added: “This hard-fought victory was not without casualties.”

The group includes the region’s major listed companies, such as set-top box maker Pace and supermarket Morrisons, as well as mutuals and privately-owned giants such as construction firm NG Bailey and Sheffield Forgemasters.

Operating profit at the group rose 54 per cent to £3.5bn, driven mainly by gross profit improvements.

Liz Barber, group director of finance and regulation at Yorkshire Water parent company Kelda Group, said operating costs rose by less than one per cent and average pay rose to £22,810, from £22,562. In a “finance director’s review”, she said: “Yorkshire’s long-standing reputation for prudence and financial discipline was evident in increased profits.

“However, weakness in demand in our traditional UK and international markets may continue to test the group’s mettle... Further expansion may hinge on the ability to make inroads into developing markets further afield.”

The report, which is not an exact year-on-year comparison because the make-up of the group has changed slightly, also highlighted the number of big-ticket deals funded by private equity, such as buyouts of £500m for sofa retailer DFS, by Advent.

It also warned of the effect of Government spending cuts in Yorkshire.

“There can be little doubt that £83bn of real terms cuts in UK public expenditure by 2015-16 presents a game-changing landscape for companies in our region.”