German, British and French companies are the best in Europe at creating wealth, while UK firms are outperforming their continental counterparts, a UK government study of top European firms showed on July 03.
The UK's Department of Trade and Industry (DTI) report published on Monday, said wealth creation by large UK companies rose 10 percent last year, more than French and German firms, while the UK also had more companies in the top league than any other European country.
Examining Europe's top 700 companies, the DTI study calculated how efficient a firm was at creating wealth by taking away the costs of interest, tax, depreciation, amortisation and employee costs from the companies total sales, something it called "value added wealth".
"Value added provides a different perspective on the company's operations than just looking at profit," Mike Tubbs, a senior industrialist who analysed the report told Reuters.
The measure highlights how cash generated by a company is being used for capital expenditure, research and development, paying staff, returning cash to shareholders or tax.
"It also indicates whether a company is re-investing a sufficient proportion of its wealth to sustain continued growth," added Tubbs.
Europe's top 700 created a combined 1,552 billion pounds ($2,844 billion) in "valued added" wealth, up 9 percent on last year, with German, British and French companies accounted for 64.5 percent of the list.
Oil and gas giants Shell and BP topped the league with value added wealth of 31.6 and 26.8 billion pounds respectively. Germany's DaimlerChrysler, engineering group Siemens and Deutsche Telecom were next.
Although banks made up the largest proportion of the top-flight once again, comprising nearly 15 percent, spiralling global energy prices meant oil and gas producers cemented second spot and saw the biggest gains compared to last year, with a 25 percent increase.
The strong showing by UK firms was put down to good performance within their sectors, and was partly due to sector mix differences between countries muddying direct comparisons.
"The UK economy is the fourth largest economy in the world, and in recent years we have grown more rapidly than our major European competitors," said Alistair Darling, UK Secretary of State for Trade and Industry.
"British firms' ability to compete in the global economy largely and increasingly depends on creating higher levels of value added through innovation," he added.
The study said the 197 UK companies in the list had a higher wealth creation efficiency, adding more value at less cost. The efficiency rating was put at 173 percent for the UK compared with 153 percent for the European 700 as a whole.
UK companies in the list had a combined value added of 403 billion pounds, the 96 German firms 310 billion, and the 91 French firms 288 billion.