RUTH SUNDERLAND: UK plc brightens up the mood

The weather has been wet, interest rates have risen again and Chancellor Jeremy Hunt says the UK is caught in a trap of low growth.

It is easy to wallow in defeatism and gloom. But as readers of these City pages may have noticed, there is a much more positive story to tell.

Despite the gloomy backdrop, some of the UK’s largest companies are in thriving health, as the recent crop of half-year results has shown. Shares of Rolls-Royce are up nearly 140 percent over the past 12 months on signs of a resurgence under new boss Tufan Erginbilgic.

He firmly believes that the bounceback is not just a recovery from Covid, but is due to “self-help” in a company that has not always been well managed. The UK’s largest defense company, BAE, a beneficiary of the war in Ukraine, is also in good shape.

This is excellent news for people who believe in ‘leveling up’ as the company is a major employer and provider of apprenticeships in less affluent areas such as Barrow-in-Furness. Then we have the rise of Greggs, whose pies and sausage rolls have captivated the nation. It doesn’t seem to stop. From the heart of Geordie, it has colonized the south and plans to have 3,000 stores by the end of 2027. Not bad for a business I remember as a youngster in the Northeast for selling cheap, shaky bread loaves to grandmas.

No roll call of corporate excellence would be complete without a mention of Next. Under Lord Wolfson it is one of the best run companies in the country. Sales from May to July were better than forecast. A satisfying moment in the summer of 2023 was when pharmaceutical giant AstraZeneca turned the tables on Pfizer, the US rival that tried to take it over in 2014.

AZ, now the UK’s most valuable company, is steaming ahead with strong sales of cancer and diabetes medicines. Chief executive Pascal Soriot turned his nose up at Pfizer with a $1 billion deal to buy its gene therapy assets.

There are common threads. One is simplicity. Greggs is an example of doing things deceptively simple very well. The observation that people want snacks later in the day helped improve sales as the group extended the hours of some stores.

Like most of the best ideas, once someone has thought of it, it’s obvious. Second is clarity. Wolfson from Next is known for his clear communication, which stands out in a quagmire of verbosity. Companies with a clear strategy, clearly expressed, are more likely to succeed than companies drowning in gobbledegook.

Third, companies need to be well run and have the foundation right, which is why Next performs. The prevalence of mismanagement elsewhere is shocking.

The UK is privileged to have a solid base of large companies with a long history. Rolls-Royce goes back to the Victorian era, as does BAE’s legacy, through firms it acquired, such as the old Vickers shipbuilders.

Greggs was founded in Tyneside over eighty years ago. The old ICI – in its splendor the British business world with its fingers in pharmaceuticals, chemicals, fertilizers and paints – lives on in Astra.

Some people on Teesside, where it was a major employer, still referred to the AZ Covid vaccine as ‘the ICI jab’. Sustainability is now understood to mean green, but these companies are sustainable in the sense of a long life.

Yes, we should put energy into exciting new businesses, but also appreciate the golden oldies.

They don’t have to be mutually exclusive. The late great Ivan Menezes was the boss of beverage giant Diageo for a decade, some of whose brands date back to the 18th century. Yet he described the multinational as a ‘start-up’ because there are always so many new opportunities to conquer. That’s the spirit.