Plimsoll says its recently published analysis of the UK paper and board industry prompted a backlash in the industry. “Having found that a record number of paper and board companies are on the danger list, 5,965 jobs could go, and up to a third of paper and board firms are at risk of failure under a prolonged slowdown in the UK economy, the news was hardly welcome,” the consultancy states.
In response, it has produced an updated study to incorporate the very latest figures.
Feedback Plimsoll received from the original publication was that, in general, companies were not experiencing too much difficulty in retaining sales. This is borne out in the updated analysis that puts current market growth at a respectable 3 per cent. However, this is down from the previous year’s 5 per cent. Of the 600 companies analysed, 374 are holding or increasing sales on last year.
However, says Plimsoll, this headline hides some worrying trends: 30 per cent of companies are currently selling at a loss; 48 per cent are making less profit than last year; and, despite the alleged slowdown in lending, 29 per cent are in more debt now than they were 12 months ago. This updated analysis rates 120 companies as currently a high risk of failure.
According to Plimsoll, whilst sales in the market continue to grow, albeit at a slower pace than last year, “this buoyancy is distracting some directors from other areas of the business which require urgent attention”.
Senior analyst David Pattison comments: “The reality is, sales teams are very rarely privy to the full picture. All too often, they are unaware of the costs of overheads, the levels of debt and how their sales add up in profitability. The latest figures do seem to suggest that the focus has switched from profit to sales, as companies grab business almost at any cost.”
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