Mixed picture for economy as turnover for Beds businesses is up while profits are down
Bedfordshire's businesses have had a mixed year with increases in turnover and employment but a significant fall in profitability, according to a new report.
The Bedfordshire Limited study is conducted by business advisers Grant Thornton and analyses the performance of the 100 largest, privately owned companies in the county to provide a recognised barometer of the overall health of the local economy.
The report also includes a Growth Index which looks at the 25 companies with the highest profit growth and, for the first time this year, a ‘ones to watch’ section highlighting the fast growing businesses just below the top 100 threshold.
The study findings, unveiled to more than 70 local business leaders at a breakfast event hosted by Grant Thornton, revealed the combined turnover of the top 100 companies increased by a healthy 3.5% to £3.9bn. However, this was offset by a significant fall in Earnings before interest, tax, depreciation and amortisation (EBITDA) of 23%.
In a similar mixed picture, there has been a strengthening of current assets by 4% and a 3.9% fall in total debt but cash balances fell by 6.9%. However, employment remains strong in the county with an increase of 13.3% to 24,915 people.
Steve White, from Grant Thornton’s Milton Keynes office, said: “This year’s report paints a mixed portrait of the Bedfordshire economy. Whilst turnover and employment have remained strong for another consecutive year, we have seen a significant fall in profitability. However, it is important to note that the decrease in EBITDA is partly skewed by significant events at certain companies in the top 100 and when you look at the results overall the majority - 66 out of the top 100 businesses - saw a rise in EBITDA.
“Interestingly, our report highlights that SMEs achieved a higher rate of turnover growth (4.7%) compared to large corporates (2.6%) although they were not immune to the fall in EBITDA with a decrease of 14.8%.
“Positively, employment growth has remained strong and there is still no sign of a tightening employment market feeding through into wage inflation. Indeed, for the first time average remuneration has dropped.”
The Bedfordshire Limited report also analyses the performance of the top 100 companies by sector.
Seven of the nine sectors increased turnover with four reporting an increase in EBITDA. The standout sectors were Business Support Services, which had the biggest growth in turnover at 18.1%, and the Technology sector which bucked the trend with a 63.8% increase in profitability.
However, the Freight, Logistics & Aviation sector had a challenging year with a 66.4% fall in EBITDA, principally driven by a significant downturn in the performance of Monarch Airlines, although turnover and employment were both up at 2.9% and 8.3% repectively. Similarly, Healthcare & Education saw a 69.7% decrease in EBITDA, having felt the impact of changes to public sector funding and the increase to the National Minimum Wage.
Mr White added: “While it is encouraging that the majority of sectors saw an increase in turnover and employment, several have faced a difficult year with a number of pressures impacting the bottom line, particularly Healthcare & Education and Freight, Logistics & Aviation.
“However, both these sectors have invested in more staff through recruitment and in existing staff through increased wages. With a continued skills shortage highlighted across Bedfordshire, this investment will be vital in turning around their growth prospects for the year ahead.”
The findings were presented at The Sculpture Gallery in Woburn with Alex Burns, chief executive of Millbrook Proving Ground, guest speaker.
Pictured, from left:Dominic Preston, Partner at Grant Thornton, Alex Burns, guest speaker and CEO of Millbrook Proving Ground, Steve White, Director at Grant Thornton