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By Harsha Jethnani
SINGAPORE'S best-performing small- and medium-sized enterprises (SME) defied the odds to keep profits intact through the downturn while larger firms took a hefty hit to the bottom line.
Profits at the top 500 SMEs reached $955 million for the 12 months ended May 31, 2009, just 0.2 per cent down on the previous corresponding period. It was far more painful among the leading 1,000 larger firms where earnings came in at $95.7 billion, down 27 per cent.
Turnover told a different story. Top SMEs witnessed a modest 4.7 per cent increase in sales to $15.6 billion but larger companies improved by 11 per cent to $1.7trillion.
The figures were released yesterday by DP Information Group, a business ranking body that hands out annual awards for well-performing firms.
They show that while many SMEs - firms with turnover of up to $80 million, less than $15 million in fixed assets and at least 30 per cent local ownership - were expected to struggle through the recession, the elite performers fared far better than expected.
DP Information group managing director Chen Yew Nah said: 'SMEs have proven to have remarkable nimbleness in their ability to realign their business.'
Now in its 23rd year, the DP awards use annual audited financials as a primary basis for assessment. Some 17,000 company statements from June 1, 2008 to May 31 last year were studied for sales, net profit and return on equity.
The data has been used to rank the country's top 500 SMEs, its leading 1,000 larger companies - called the S1000 - as well as a stellar 100 according to overseas revenue contributions.
The DP data also throws light on how various sectors have fared during the recession and it is clear that manufacturing, property and the wholesale business sectors have been the hardest hit.
Firms in the S1000 category in the manufacturing sector saw profits dip by 37.9 per cent. The wholesale sector witnessed a dip of 32.5 per cent. Profits for S1000 firms in the property sector declined 42 per cent.
The data also shows that the credit standing of SME500 firms has improved. DP's credit ratings range from DP1 - the most desirable - to the lowly DP8.
This year, 33 per cent of the SME500 were ranked between DP1 and DP4, marking them as investment-worthy. Last year, only 13 per cent made the grade.
Larger firms have lifted their game in this regard as well: 100 companies in the S1000 category scored a DP1 credit rating this year as opposed to 88 last year.
Another factor to emerge from the number crunching was that SMEs with a presence in emerging economies fared better.
The SME500 firms earned 38 per cent of their revenues from South-east Asia and 15 per cent from India last year.
IPS-Lintec Asia Pacific, an SME winner in the awards recognising overseas revenue contributions, attributes its success to its diversified overseas market and specialised products.
The group, which makes industrial infrastructure, operates in North and East Africa, India, China and Uzbekistan. 'We want to look next into Latin America. Brazil is bubbling although setting up the manufacturing plants is not that simple,' said Mr Archer Ong director, finance and administration of the IPS Group.
Mrs Lim Hwee Hua, the Minister in the Prime Minister's Office and Second Minister for Finance and Transport, will be the guest of honour at the awards ceremony at the Ritz-Carlton Millenia Hotel tonight. There will be prizes for turnover, turnover growth and net profit excellence and an award on equity excellence among other gongs.
This article was first published in The Straits Times.
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