Timber companies which borrow heavily to capture extra market share are set to put more pressure on an already competitive market place during 2004, according to analysts.
Plimsoll Publishing Ltd’s first edition 2004 analysis of the UK timber products markets, featuring 1,000 businesses, says 82 companies which receive big outside financing are yielding a 16.1% sales growth – six times the industry average of 2.9%.
Plimsoll analyst David Pattison said the companies are using aggressive sales techniques, investing in systems and capital, and forcing “laggard” competitors out of the market.
But their reliance on loans may restrict future decisions and hinder profitability, while any slow down in sales growth could be fatal. About 25% of the companies are loss-making.
Mr Pattison said such firms are finanically exposed and could be acquisition targets.
