One in five merchants are making a loss
Published: 10 September, 2009
LONDON: One in five companies in the UK Builders Merchants industry is making a loss as the downturn continues to make life difficult. But how many of these 206 loss making companies have simply had a bad year and how many are burying their head in the sand is the subject of a new study.
David Pattison, author of a new market report into company performance in the market says, "Increasingly we are seeing companies making a loss for the first time in their history and I think they can rightly claim they are victims of difficult trading conditions. A quick refocus on profitability would ensure this an isolated occurrence – ‘the year the recession forced us into loss'"
However, market conditions are a flimsy excuse for a band of serial loss makers that are prevalent in the market. Pattison explains, "79 companies are making a loss for the second, even third year running. These companies are either blatantly undercutting the rest of the market to enhance or maintain market share or, more likely, have delayed making the painful decision more prudent companies have made recently. No one wants to trim costs, lay off staff, cancel dividend payments and the like but continuing on regardless is fast becoming unviable. They can't bury their heads in the sand any longer."
"I congratulate the management teams that have made the often difficult and unpopular decisions. They have cut their cloth according to the market conditions and as a result are more stable for it. Those failing to do so are running out of time and cash. Without a big increase in demand they cannot support their pricing strategy for much longer. Watch out for a number of failures in the coming months among the companies we have identified."
The new Plimsoll Industry Analysis - Builders Merchants provides an intimate assessment of 1000 companies in the market. It will tell you instantly which companies are pursuing a reckless strategy and who is getting it right.
Readers of Builders' Merchants News are entitled to a £50 discount of this new special edition of the Plimsoll Industry Analysis - Builders Merchants. Call 01642 626400 for further details and quote reference PR/CS10.