Blackfriar: Have confidence in Yorkshire grit to pave way for growth

Analysts at Investec summed up Yorkshire stalwart Henry Boot’s 2012 performance with the pithy title of “Marching On...” in their investor note yesterday.

The Sheffield-based company is one of those stout, hardy, tenacious companies that just gets on with the job and doesn’t moan about the economic climate.

A number of Yorkshire companies have been telling Blackfriar that the current austerity is the new norm. If a pick-up happens all well and good, but don’t count on it.

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Henry Boot said that trading conditions in 2012 have followed the trend of the last five years and can still be described as “challenging”.

Global financial concerns hammered activity in the early part of the year and while many of the issues are not really resolved, Henry Boot believes their departure from the front pages raised confidence levels in the second half, leading to improved trading conditions by the end of the year.

The company’s finance director John Sutcliffe said this more encouraging trend has continued in 2013 and the management team is more optimistic than at this stage last year.

However, the company warns that this optimism is precarious as many of the underlying issues that have made the last five years so difficult still remain and are only beginning to improve.

The UK banking sector is smaller and more costly than it ever was.

At the same time the economy is flat with retailers in particular having a grim time.

However, one bright note on the horizon is the residential market where the major house builders are slowly increasing the number of units produced and replenishing land banks.

The mortgage market is slowly improving and Government initiatives to help buyers join the property ladder are aiding this recovery.

With typical resignation, Henry Boot concedes that planning continues to be a long, convoluted and a very expensive process for builders, but then it was ever thus.

Mr Sutcliffe said that the recovery from the immediate aftermath of the 2007/8 financial crisis and subsequent recession has been pretty flat.

However, for the first time since then, confidence levels in the business, coupled with successes in land planning, developments, construction and plant hire, indicate that mid-2012 may have been something of a turning point.

“We have now had some eight months of encouraging trading and we are looking forward to the challenges of 2013 and beyond optimistically,” said Mr Sutcliffe.

But he believes that one essential ingredient is missing from the mixing pot – confidence.

“The North of England is incredibly resilient. There is scope for recovery – it’s just about confidence,” he said.

“We’re stuck in a flat growth scenario. We in the North have got used to it and now we’re realising, c’mon guys let’s really push.”

He believes that other Yorkshire businesses are doing the same and cites North Yorkshire’s R&R Ice Cream as a great example.

Now Europe’s largest own-label ice cream manufacturer, R&R has managed to ride out the recession and expand the business.

“It has been really successful,” said Mr Sutcliffe.

“UK plc has got a lot of cash, it’s all in good shape. We just need confidence to ooze back into the economy.

“People are not confident about pushing the boat forward. We’re in really good shape in the North to do it.”

When Blackfriar was at Bradford-based Morrisons’ recent annual results in London, a fellow hack said: “Everyone’s bashing Morrisons, but they made a pre-tax profit of £901m last year – that’s not to be sniffed at.”

Yes it was down from the previous year’s £935m, but Morrisons has been held back by its late entry into the convenience and online market – two areas that it is trying to remedy.

Maybe we are so quick to criticise we can’t see when a company is trying to get back to its previous stellar performance.

Mr Sutcliffe also points to the recently opened Trinity Leeds shopping and leisure development as a great ambassador for what Yorkshire can achieve through perseverance and doggedness at a time when everyone else is retrenching.

“Trinity Leeds is a fantastic development.

“It’s been packed out since opening,” he said.

Mr Sutcliffe points out that none of these companies or developments can do this on their own; no individual entity can make growth happen, but perhaps a collective effort could make it possible.

Confidence has become something to be laughed at in this cynical economic climate after five years of gloom and doom, but maybe it’s exactly what we need to break the cycle.

If you have a view on this or any other City story please contact Blackfriar at [email protected]