Sydbank asked Copenhagen Economics to identify Danish manufacturing stars in the mid-size segment and describe how they have succeeded despite the headwind from the economic crisis.

The study shows that profitable growth is limited to around one third of the analysed manufacturing firms. Only one third of the manufacturing firms have positive revenue growth between 2008 and 2012 and a profitability above average.

We call these firms stars. Based on detailed analysis of firm-level accounting data between 2008 and 2012, we find that stars differed in many aspects including the following:

• Stars increased revenue by 40 percent between 2008 and 2012, while revenues for others decreased by 35 percent
• Stars maintained a profit rate of 10-12 percent throughout the period, while others were barely profitable
• Stars increased investment by 12 percent, while others decreased investment by 1 percent
• Stars reduced their cost as share of revenue from 62 percent to 57 percent, while others increased cost share from 75 percent to 77 percent

Stars have succeeded by investing in lowering their production costs; they have trimmed their engine and hence increased efficiency and competitiveness in a tough market situation. Other influencing factors are access to export markets, high equity, low leverage and good liquidity.

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For further information please contact Partner Martin H. Thelle