Australian companies are lifting profits but not sales as nervous managers and executives continue to favour cost cutting over growth.
A report by consultants The Synergy Group found while three quarters of Australia's top 50 companies lifted their net profit in the 2014 financial year, seven out of 10 recorded flat or falling sales.
But it appears improving sales is not at the top of their priority list in 2015, with companies instead favouring earnings growth followed by efficiency improvements and cost controls.
Synergy chief executive Katherine Edgar said while cost cutting could bolster a company's bottom line in the shorter term, ultimately they need to sell more if they want to grow.
"In 2015 companies need to switch their focus from generating profit growth through cost cutting to boosting sales," she said.
"The lack of robust revenue growth is very concerning for business and should make corporate Australia sit up and take action."
The report, titled SustainSales: Outlook and Opportunities, also suggests the focus on cost cutting may be bad for shareholders, with share price growth for ASX50 companies falling behind profit growth in 2015.
But, despite the focus on cost cutting, Ms Edgar said most companies were optimistic of increasing sales, with 90 per cent expecting to lift revenue in 2015.
The report's findings come after numerous calls from economists for Australian businesses to lift investments and take risks.
Reserve Bank governor Glenn Stevens last year attributed part of the blame for the relatively weak growth of the Australian economy to a lack of "animal spirits" - or confidence to invest - in Australian boardrooms.
Share
