UK firms grow wealth but electronics lags -

UK firms grow wealth but electronics lags

LONDON — UK firms grew wealth at three times the rate in the rest of Europe, according to the 2005 Value Added Scoreboard published by the DTI, but the UK electronics sector is weaker than its European competition.

The Scoreboard, which lists the value added (wealth created) for the top 600 European and top 800 UK companies, shows that the UK’s top businesses are doing very well.  Since last year, value added by the top 167 UK companies has increased by 15 per cent compared with a five per cent increase by the rest of the European top 600.

The wealth created by a company, measured as value added, is defined as sales less the cost of bought-in materials, components and services.  The Scoreboard ranks companies by their value added, and also gives details of sales, profits, productivity and wealth creation efficiency, cost of funds, investment in R&D and capital expenditure (Capex) and market capitalisation.

The UK tops the league with more companies in the European 600 than any other country (167 with a combined value added of £347bn).  Second is Germany with 91 companies whose overall value added fell by one per cent to £297bn over the year. France is third with 84 companies increasing their total value added by 5% to £277.5bn.  

Dr Mike Tubbs, a senior industrialist with the DTI Business, Finance & Investment Unit and author of the report, said, “With five years of data the Scoreboard is now an essential benchmarking tool for companies to see how they compare to peers in their sector across the UK and Europe and to decide on the most appropriate way to distribute their value added.  This year an on-line calculator has been introduced so companies of all sizes can work out their value added and wealth creation efficiency and using the result to compare their performance with competitors in their sector.”

US and Japanese companies are not included because they do not give enough information in their annual reports to allow VA to be calculated.  A few European companies are also in this situation, either because they follow US accounting practice or because reporting on private companies varies widely across countries.

UK Electronics is weaker than the European sector but contains some high performing middle-sized companies.

There are 19 companies in the electronic & electrical sector of the UK 800 of which 11 are foreign-owned.  There are 8 companies in the electronics sector of the European 600 of which only one (Invensys) is from the UK.  The UK sector is proportionately less than one third the size of the European sector and has lower average figures for VA growth, P2 and MC/VA.  There are, however, several middle-sized UK firms with growth of VA, P2 and MC/VA well above the European average.   Renishaw is having to make high investment in both R&D and Capex to ensure it both can grow its value added and increase its wealth creation efficiency.  

Top 8 UK and Top 8 European Companies in the Engineering Sector

Click here for a larger version of this table.

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