A study of the UK’s leading paper and board companies has shown that few are fully in control of their overall business strategy. Plimsoll says it’s survey indicates “a remarkable inconsistency” in the companies’ commercial and financial behaviour, adding: “Very few of the paper and board firms planning to come out on top in 2007 in terms of profit and sales will actually achieve their goals”.
Senior analyst David Pattison says: “In today’s highly competitive paper and board market you cannot sit still for a minute. If you have seen sales increase this year and good profits, there is a fair chance that next year you will not be able to maintain it. Likewise, if you did not increase sales this year you are going to have to set a priority of trying to grab some growth in the next trading period.”
Last year, Plimsoll carried out a survey grading each company based on how successful they were performing on two fronts: in the market based on their sales and commercial success; and their overall financial strength, taking into account profitability levels and the level of debt carried by these companies.
This year, Plimsoll has revisited and updated the analysis to see how the companies have coped with another year of competitive trading. The findings show that almost half of the 400 companies analyzed have changed strategy in the last 12 months- and not all by choice.
Of the 105 ‘winners’ last year, 43 have retained their winning status. 53 are new to the category, having switched strategy since last year. Of last year’s ‘losers’, 54 have found themselves in this category for a second year. More worryingly for the industry, they have been joined by 44 other new losing companies.
Of the 84 companies awarded ‘chasers’ status last year, 36 continue with their pioneering strategy. They have been joined by another 52 companies, bringing the total number of chasers in the industry to 88.
Last year, Plimsoll ranked 110 companies as ‘sleepers’. Fifty of these continue to preserve financial strength at the expense of sales growth, and they have been joined this year by 68 other companies who have switched strategy.
Says David Pattison: “What this analysis is clearly saying is that, in a very competitive market, of the companies planning to be a winner by the end of 2007, few will actually achieve their goal.”
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