Companies still expanding
Top 100 private firms ‘resilient to uncertainty’
Glenfiddich, produced by number one food and drink firm William Grant
Scotland’s top private firms employed more people, increased salaries and saw a rise in profits in 2017, according to new research.
The data confirms recent evidence that businesses are showing greater resilience to political and economic uncertainty.
A second report published today says UK firms are also reporting strong order books and defying Brexit pressures.
Grant Thornton UK’s annual Scotland Limited report assesses the commercial performance over the past year of Scotland’s top 100 privately-owned limited businesses.
It reveals that total combined turnover has risen to £21.4 billion, from £20.8bn in 2016. Total profits before taxation increased to £1.6bn from £1.4bn.
The total number of people employed by the top 100 firms rose to 119,087 from 110,632, with total remuneration also increasing to £3.3bn from £3.1bn.
Andrew Howie, managing partner for Grant Thornton in Scotland, said: “2017 was undoubtedly a challenging year for the Scottish economy, but there’s little doubt that resilience and a sharper focus on achieving sustainable, long-term growth have become embedded in our industrial strategy, which has helped to counter the global challenges that lie ahead.”
Food & drink again dominates the list with 25 companies in the top 100, up from 24 in 2016. The list includes William Grant & Sons at number 1 and The Edrington Group, taking third place. The 25-strong group enjoyed a combined turnover of £4.9bn against £3.7bn in 2016. The total number of employees rose from 19,239 to 24,552.
James Chadwick, head of food & drink at Grant Thornton in Scotland, added: “Scotland’s food & drink companies have good reason to celebrate, after another incredibly impressive year of growth.
“Key to the success has been a genuine commitment to collaborate, enabling the widest possible range of companies – from small start-ups to long-established family-run operations, to build on each other’s success and champion a single Scottish food and drink brand on the global marketplace.”
The ongoing challenges facing Scotland’s energy sector are reflected in this year’s report with the number of firms from the industry group down from 9 in 2016, to 7, and total turnover down from £1.4bn to £1.2bn. However, 2017’s data offers some optimistic indications for the year ahead, with the total number of employees up from 6,990 to 7,316.
Barry Fraser, Grant Thornton’s head of energy & natural resources in Scotland, commented: “Led by a decline in oil prices, Scotland’s energy sector has endured a challenging period with cost cutting and a lack of new investment.
“However, the industry is resilient and many companies have adapted and made themselves more efficient, re-focused on stronger international markets, diversified into other industries and collaborated to expand their product and service offerings.
“The oil price has also now improved and there are positive signs that this will help increase investment into the sector.
“We’re not out of the woods yet, but Scotland’s energy sector will continue to have an important role to play in the country’s economy.”
Key Scotland Limited findings of the Top 100 private Scottish businesses:
- Combined turnover up from £20.8bn to £21.4bn
- Profits before taxation up from £1.4bn to £1.6bn
- Total number of employees up from 110,632 to 119,087
- Total remuneration up from £3.1bn to £3.3bn
- Number of firms in the top 100 by sector:
- 25 Food & Drink businesses
- 22 Manufacturing & Industrial businesses
- 21 Property & Construction businesses
- 10 Automotive businesses
- 7 Energy businesses
- 6 Retail businesses
- 4 Transport businesses
- 2 Technology, Media & Telecommunications businesses
- 1 Business Support Services business
- 1 Financial Services business
- 1 Private Healthcare business
UK GDP expected to grow
UK businesses are experiencing strong order books, driving an expected increase in UK GDP growth in early 2018, according to the latest Business Trends Report by BDO.
The firm’s Output Index, which tracks current order books and is an indicator of GDP growth over the next three months, suggests that the UK can expect GDP growth of around its long term trend of 2% in the early part of 2018.
This is the first time that the Index has increased since July 2017 and indicates that British businesses have had a strong start to the year, despite mounting uncertainty about Brexit.
The rise in the index has primarily been driven by the services sector, which accounts for the majority of UK GDP.
BDO’s Manufacturing Output sub-index has also increased as UK manufacturing continues to benefit from increasing overseas demand, partly because of the cheaper pound.
Record high employment levels look set to continue early in the first half of 2018 as firms’ hiring intentions recovered from a temporary fall in recent months.
However, while output and employment are up, further increases in prices could also be on the horizon for UK consumers. BDO’s Inflation Index increased and now sits above the long-term trend. The increase has been driven by rising input costs for businesses which will likely be passed on to consumers later this year.
Martin Gill, partner and head of BDO in Scotland, said: “British businesses have made a strong start to 2018 despite the ongoing uncertainty about our nation’s future outside of the EU. However, if the government continues to stall on providing a clear Brexit strategy for businesses, the performance of UK firms will suffer.
“Last week’s hold on interest rates will be welcome news for those still adjusting to last year’s hike.
“But with indications of a further rates rise later this year and the future of the UK’s relationship with the EU continuing to fuel uncertainty, we need the government to focus its attention on making smart investments for the future now – drastic improvements to infrastructure and upskilling our nation’s workers must be a priority.”