Post by Ismail AbdulAzeez on Jul 3, 2017 9:34:12 GMT 1
Exports and reinvesting profits are the winning keys for small and mid-sized firms
Exports and reinvestment of profits are two characteristics of successful small and mid-sized companies in Italy, or those that outperform the average firms in their sector. In the analysis carried out by Global Strategy, which has reached its ninth edition, these include 522 companies, with growth rates that are nine times higher in terms of production value and the capacity to triple their operating result in five years.
How? A determining characteristic is the share of exports, on average about 48%, with prospects for growth in the next three years. International competitiveness is the arrival point of a wider strategy which has a specific focus on innovation, with 4% of revenues dedicated to research and development, joined by growing investments (for 80% of the sample) in new industrial processes and commercial developments. The underlying philosophy looks toward the long-term, with 70% of profits generated reinvested within the company, reinforcing (in 65% of the sample) net assets.
The virtuous approach, with average annual rates of revenue growth of 11%, has over time produced a decisive increase in employees of “excellent” small and mid-sized companies, which have grown 30% in five years, meaning 16,000 more job posts.
“These numbers show that where there are investments, innovation and internationalization, there is growth. Not just for the company but also and above all for the region, suppliers, and the country’s business system,” said the president and CEO of Global Strategy, Antonella Negri-Clementi.
Starting from a database of 7,500 companies (revenues between €20 million and €250 million) and excluding those controlled by big groups or multinationals, the analysis focuses on small and medium sized companies that manage in a systematic way to beat the average of their sector, presenting superior rates of growth, profitability and solidity.
The 522 small and medium sized companies identified (up compared to the 448 of the previous edition) represent 7% of the sample. The North West and North East stand out as regions of the country, having 74% of the 522 outperforming firms. For the first time, the food sector has jumped to the first place (17%), ahead of machinery (15%) and metal products (12%).
In 80% of cases, the firms are family companies, with a governance that is starting to move toward more evolved models, with the presence of independent councilors within the board. The attitude toward innovation continues to make the sample particularly attentive to digitalization of processes and products.
“This is a part of the country that is moving forward, and that has understood the need to open to foreign markets,” said the CEO of export credit agency SACE, Alessandro Decio. “Some tools, such as the Industry 4.0 digital economy overhaul, are starting to work: it has been understood that if the country wants to go well, it has to support its own companies.”