SUFFOLK firms are restructuring to stay competitive after seeing larger turnovers but falling profits as costs rise, a business survey has found. The Suffolk Ltd 2006 report, compiled by accountants and business advisers Grant Thornton, also revealed a thriving transport and motor retail sector, with operating profits among major haulage companies up by 13% on last year.

SUFFOLK firms are restructuring to stay competitive after seeing larger turnovers but falling profits as costs rise, a business survey has found.

The Suffolk Ltd 2006 report, compiled by accountants and business advisers Grant Thornton, also revealed a thriving transport and motor retail sector, with operating profits among major haulage companies up by 13% on last year.

The annual report, now in its sixth year, examines the latest results of the top 100 businesses in the county, excluding larger quoted companies, and produces a composite business report to cover the seven key industry sectors in the county. The minimum turnover level was £12million.

The transport and motor retail trade enjoyed a 28.9% share of total turnover, making it the county's biggest sector for the fourth successive year.

Meanwhile, the food and agriculture sector, and retail and wholesale distribution, were almost on level pegging with a 19.5% and 19.3% share of total turnover respectively.

But while overall turnover grew by 4.5% to £4,850million compared to the previous year, overall operating profits were down by 17% to £127million, and pre-tax profits fell by 20% to £106million.

Grant Thornton reported that the county had been “brought down to earth with a bump” as operating profits fell to pre-2005 levels, following last year's “exceptional” figures.

Rising costs helped hammer pre-tax profits to their lowest level since 2002.

Graham Shorter, a partner at Grant Thornton's Ipswich office said: “The results of this year's Suffolk Ltd bear out the caution that was expressed by companies last year, when Suffolk Ltd was posting record profits.

“Across most of the sectors this year there has been deterioration in profitability. However, there has also been evidence of restructuring to ensure that businesses remain competitive.

“With sharply higher commodity prices, a continuing record level of consumer debt overshadowing demand in the economy, and increasing competition from emerging economies, the coming year will bring many challenges, as well as opportunities for all companies in Suffolk.”

Suffolk Ltd's transport and retail sector comprises 29 firms, with 13 from the haulage sector and 16 in truck and car retail. Together, they accounted for 30% of Suffolk Ltd's pre-tax profits.

All the major haulage firms improved on the previous year's results, with turnover rising by 12% at £68million and operating profits up by 13% or £3million.

Haulage now contributes more than £600million to Suffolk Ltd's turnover, with Turners (Soham) Ltd still the leading business. The report described the company as “in a class of its own” with profits of nearly £15million. Operating profits for the haulage sector as a whole totalled £24million, or 19% of the total amount for Suffolk Ltd.

The fastest-growing company in Suffolk Ltd was Stuncroft Holdings Ltd, with a turnover growth of 96%.

The number of people employed by Suffolk Ltd increased by just under 10% to a record 32,907, and the retail and wholesale distribution sector employed the highest proportion at 28% for the first time. The transport and motor trade employed 22% of the workforce.

Average salaries grew by just 0.2% to £19,934.

The services sector increased its turnover by 24% and its operating profits by 8%, but high interest charges saw pre-tax profits drop by 39%.

Manufacturing accounted for just 9% of Suffolk Ltd's turnover, but 16% of its operating profits. Meanwhile, food and agriculture turnover increased by 3%, while pre-tax profits fell by almost a half.

Turnover in the property and construction sector fell by 4% and profits were more than halved.

A total 19 of Suffolk Ltd's companies reported pre-tax losses this year, compared with 12 the previous year.

The largest employer was the East of England Co-operative Society with 5,426 employees, a 68% increase on the previous year following the merger of Ipswich & Norwich Co-op with Colchester & East Essex.

The average number of days Suffolk Ltd firms took to collect debts fell from 34 to 33 days.

Julian Munson, acting chief executive at the Suffolk Development Agency said the outlook for the county remained positive.

“Major projects such as the new University for Suffolk Campus and further expansion of the UK's largest container port at Felixstowe will help contribute towards a brighter, more prosperous Suffolk in the future,” he said.

However, he added that the county could not be complacent and “significant challenges” remained, including lower than average wages, low entrepreneurship rates and the gross value added per head increasing at a lower rate than the regional and national average.