£3.9bn is cost of global recession for UK builders' merchant industry
Published: 11 December, 2009
UK: The recession has cost the UK builders' merchant industry £3.9bn in lost profit in the last year, according to new research by market analysts Plimsoll.
David Pattison, senior analyst and author of the Plimsoll 'Industry Analysis – Builders’ Merchants', said: "The recession has hit the sector hard, with more than half of the companies analysed in our new report making less profit than they were a year before."
The reason for this collapse, Mr Pattison suggested was due to subdued demand and the resultant competition has meant that many companies are unable to charge the price they need to make healthy profit margins. In the absence of pricing power, many companies will have to make painful but necessary cutbacks in the next 12 months."
However, the burden of lost profit is not being shared equally, as Mr Pattison related. "Around 600 companies have bore the brunt of the downturn. These companies have seen their profit margins decimated and in the absence of a big upturn in demand will have to cut their cloth accordingly.
“Watch out for further job losses and closures as these companies as they look to claw themselves back to profit next year. If they fail to act quickly they could find themselves running out of cash."
On the other hand, there are still companies getting it right in spite of it all, "Amazingly, there are 169 companies that have maintained or increased their profit margins in the last year.
"Those companies prove that an efficient business selling the right product to the right market can still succeed in the mefchant industry."
The new Plimsoll 'Industry Analysis – Builders' Merchants' gives an instant performance rating on the top 1000 companies in the market. Each company has been rated as 'strong', 'good', 'mediocre', 'caution' or 'danger', according to their latest performance.
Readers of Builders' Merchants News are entitled to a £50 discount on this special edition. Phone 01642 626400 for further details and quote reference PR/CS10.