Profits at Norfolk's leading independent companies have tumbled by nearly a fifth over the past year while business performance has stalled, according to a major new survey of the county's economy.
At first glance, the findings are alarming – a modest increase in turnover allied to a dramatic drop in profits.
But Grant Thornton's Norfolk Limited 2016 report – a look at the public accounts of the county's 100 leading independent businesses – presents a more nuanced picture of the county's economy over the past year and, the firm insists, paints a picture of modest growth in uncertain times.
Overall, turnover rose 2.1% to £5.72bn, while operating profits fell 18% from £270m to £222m and pre-tax profits slumped 21.2% from £204m to £161m, after a tough year for the oil and gas, retail and services sectors.
But removing the results of the hardest-hit company from both the oil and gas and retail sectors, which have had to withstand a plummeting oil price and intense competition respectively, shows a more buoyant county-wide picture, with a 3.5% increase in operating profits.
Audit manager Tom Burdett, one of the authors of the report, said: 'People must see past the headline, because once you have stripped out a few companies which have performed badly, the picture is pretty buoyant compared to our research in other counties.'
Employment grew by 6% to 46,801 employees, with 64 of the 100 companies increasing their headcount in the past year, while average wages stood broadly static at £22,620.
By sector, changes in the oil price hit the energy sector – which saw four companies fall out of the list – but boosted haulage and distribution companies, who saw turnover and profits rise, and achieved the second-highest profit margin (7.3%) behind oil and gas (9.5%).
Meanwhile, food and agriculture operating profits rose 65% to £35m on a stable turnover of around £1bn.
The report also showed Norfolk's gearing – the extent to which a company is funded by debt – rising to 94%, well ahead of neighbouring Suffolk (41%), Cambridgeshire (23%) and Essex (65%).
But again the results were skewed by seven companies holding two-thirds of the debt, and removing them gives a healthier figure of 46%.
Grant Thornton director Toby Wilson said the number of well-established and family-owned businesses in Norfolk could play into a general aversion to risk.
'One of their great strengths is that they are stewarded rather than managed,' he said. 'They have been around for three or four generations, whereas if you have a listed or a private equity-backed business there may be pressure to take a more aggressive strategy – but that comes with a greater risk of business failure.'
Overall debt rose 10.8% to £1.1bn –though only 5.4% without the seven companies, broadly in line with increases in fixed assets.
The findings of the report, which concentrate on businesses owned and managed within the county, thus excluding the likes of Aviva, were presented at a business breakfast at Carrow Road attended by more than 150 business leaders.
Do you have a business story? Email mark.shields@archant.co.uk
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