In a new analysis on the top 95 companies in the UK paper industry, David Pattison, senior analyst at Plimsoll Publishing, asks "is the UK Paper industry congested at the top?" - and his answer is "definitely".
He explains: "There is clear evidence of stagnation at the top of the market. Fifty-five of these top 95 companies failed to increase sales above inflation, compared with 51 last year.
"With many also experiencing rising costs, their future direction now looks uncertain," he continues. "Size does not necessarily lead to success in the paper industry. Twnety-five of the leading companies did not make a profit last year. Despite their size, they are less profitable than the smaller market players. Only 17 of the top 100 companies have shown profit growth in three consecutive years. Thirteen companies have not made any profit over the same period!"
Looking to the future, David Pattison contends: "The top end of the paper industry is heavily congested, with no room for any of the major companies to breathe. In other markets where this has been the case, supermarkets for example, there has been a series of major acquisitions to clear the air. Smaller companies are at little risk of take-over by any of the majors - they simply don't offer any strategic opportunity.
"It's a clash of the titans scenario - I predict we might see at least two of the UK's top 95 paper companies having to merge or be taken over. In fact it's so likely we have put 24 on the danger list," he concludes.
The full 347-page analysis including a four-year financial health check of each of the top 95 UK paper companies is available for £500. Converting Today readers are promised a five per cent discount when ordering.
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