Top200 list flashes some positive signals

Collectively, the results delivered by companies in this year’s list only tell story of continued recovery from the world’s worst economic downturn in 40 years.

But individually, they could suggest something little more promising, according to NZ Management magazine’s consulting editor Reg Birchfield.

Revenue generated by the top 200 companies increased 7.9 percent on last year’s $141.5 billion to $152.8 billion.

The top 30 financial institutions went backwards, with revenue down 9.1 percent.

Add the two groups together, and revenue increased five percent to $179 billion.

Given the world economic climate, Birchfield says that’s not bad amount of growth.

The after-tax profitability of the top 200 dropped 0.6 percent on 2010 to $3.99 billion.

The finance sector did better, lifted its collective net profit by 420.7 percent to $2.6 billion. That is well up on the previous year’s low of $500 million.

The agricultural sector had good year. Strong commodity prices and consequent high returns meant farmers splashed out on fertiliser and other sector-related products and services.

This year’s three Top 200 Awards judges think there is more to the enhanced performance of some agriculture-based enterprises than just strong commodity prices – though they undoubtedly provide the premium.

“There is an underlying sophistication coming through in many of New Zealand’s largest businesses, and particularly in the agricultural sector,” says Janine Smith, principal of The Boardroom Practice and professional company director.

“It is very heartening and I think we can feel more confident about New Zealand going forward if this continues.”

Asia-Pacific Risk Management director Roger Kerr says there is greater sophistication in management processes and in the use of smart technologies.

He also sees positive signals in the management of capital, and in managers’ and directors’ strategic approach to doing and building their businesses.

The judges identified improved governance as key factor in the emergence of smarter, more strategic and ambitious thinking.

They say any improvement in the corporate performance of New Zealand companies will have to come from the nation’s boardrooms.

The judges warn, however, that directors must do more than read and note management representation letter or rely on external advice as way of outsourcing their duties and obligations.

Neil Paviour-Smith, managing director of Forsyth Barr, says there is an expectation that where individuals have specific capabilities and knowledge they will use them.

“They do that through astute (boardroom) questioning and analysis of management actions.”

 

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