Sales and jobs grow but profits fall, says annual report on Bedfordshire’s economy

They continue to face uncertainty and challenges, says the annual Bedfordshire Limited report conducted by financial and business advisers Grant Thornton, which analyses the performance of the 100 largest, privately owned companies in the county to provide a recognised benchmark of the overall health of the local economy.

The 2018 report findings, unveiled to local business leaders at a breakfast event at Woburn Abbey’s Sculpture Gallery, revealed that combined turnover of the top 100 companies increased by a steady 1.1% to £3.2 billion.

Overall profitability (measured by Earnings Before Interest, Tax, Depreciation and Amortisation) fell slightly by 1.7% although there was a clear divide between the performances of consumer-facing and business-to-business sectors.

 

 

Automotive and motor retail, food, drink & leisure and retail & wholesale posted a combined 4.1% decline in profits, underlining the challenging trading environment they face. The remaining sectors operating in a largely B2B environment demonstrated a greater level of resilience, delivering a 2.2% increase in profits.

Positively, employment continues to remain strong among the county’s largest privately owned businesses with the top 100 growing their combined workforce by 15.2% to 22,370 people. 

However, average salaries remained broadly static, down 1.4% to £26,546, reinforcing the pressure on disposable income which is affecting consumer sectors.

The report and launch event was sponsored by Bedfordshire Chamber of Commerce. Grant Thornton director Steve White said: “Following 2017’s strong performance, this year we are seeing a more mixed picture from the largest companies in Bedfordshire with some able to adapt and prosper whilst others face increasingly difficult trading conditions.

“Clear signs of pressure in consumer spending are starting to emerge as the lack of real growth in wages over a prolonged period of time starts to bite and skills shortages remain a feature of some sectors. 

“While, however, there remains significant uncertainty over Brexit, the business community is showing great resilience against this backdrop.”

 

The 2018 study also revealed that turnover growth was broadly consistent across companies of different sizes with the county’s largest businesses (turnover greater than £50 million) achieving a 1.3% rise, just ahead of the 0.9% achieved by SMEs.

However, in terms of profitability, SMEs saw a 3.4% fall compared to larger firms which posted a broadly static 0.1% increase, suggesting smaller firms are facing increased pressure on their profit margins.

 

The Bedfordshire Limited report also analyses the performance of the top 100 companies across nine different sectors.

All sectors reported a rise in turnover but only three saw a growth in overall profitability. Industrial and manufacturing led the way with a 27% increase in sales and a 29% profit growth. This outstanding performance reflects the resilience and innovation of Bedfordshire’s high value add, specialist manufacturing base.

In contrast, healthcare & education saw a 21% profit fall, highlighting the continued pressure being exerted by public spending constraints and the impact of issues such as the increased living wage. However, the sector reported a strong 15.8% increase in employment and a 9% growth in turnover.

Mr White said: “Given some of the economic headwinds that are starting to emerge, a more sporadic performance across the top 100 is to be expected. However, the underlying foundations are strong and Bedfordshire remains a fantastic place to do business. 

“We have seen significant investment in the county over recent months and based on past performance, local firms are more than willing, and able, to rise to the challenges they face.”