Major Australian companies are failing to grow revenue and only report better profits by cutting expenses, according to analysis of the December half-year earnings results.
The majority of the ASX50 have seen negligible or negative growth in sales revenue in the latest round of earnings reports.
The report by sales consultancy Synergy Group, SustainSales: Outlook and Opportunities, compiles the sales outlook of major organisations in the region. It also analyses ASX50 earnings data.
While a majority of the ASX50 (75%) experienced some level of net profit growth in 2014, 70% also experienced negligible or negative growth in sales revenue.
“Net profit growth through cost cutting measures or efficiencies programs are only a short-term solution to meeting market expectations and doesn’t necessarily lead to a sustainable performance or long term growth,” says Katherine Edgar, CEO of The Synergy Group.
“In 2015 companies need to switch their focus from generating profit growth through cost cutting to boosting sales. The lack of robust revenue growth is very concerning for business and should make corporate Australia sit up and take action.”
A the chart below shows, share price growth has also not kept pace with net profit growth. About 60% of ASX50 reported declines or marginal increases in share price, indicating market confidence has not yet been fully revived.
The report found that sales growth is on the boardroom agenda for 2015. About 70% of companies are reporting sales to have the most impact at a board level compared to other key business functions.
Companies also hold an optimistic sales outlook with 90% of those surveyed expecting revenue to grow.
“It is promising that sales is on the boardroom agenda and there are signs of the sales industry moving in the right direction, however we are not seeing this happen fast enough,” Edgar said.
There is a disconnect between high-level organisational strategy and the capability to deliver on stretched targets and inflated forecasts.
“The number of untapped opportunities is troubling. With only 10% of companies utilising data-driven analytics to analyse and predict their sales force bench strength, it’s no wonder that revenue is down,” she says.
The Synergy Group’s report is an annual study including a survey of the views of sales leaders across the Asia Pacific region. Over the last three years, more than 1,000 sales leaders and professionals across Australia and the region have participated in the study.