Tighter consumer spending and increasing business costs are causing one in three timber products companies to sacrifice margins in order to maintain sales levels, according to market analyst Plimsoll Publishing Ltd.
It said a survey of the UK’s top 1,000 timber products companies revealed that 34% have accepted a reduction in margin or fallen into loss in order to maintain or increase sales levels.
Plimsoll also maintains that 24% of companies are already selling at a loss, 11% are losing money for the second year, 58% have seen margins fall, 34% have maintained sales with reduced margins, 2.5% is the average margin and the average return on investment is 3.3%.
Plimsoll senior analyst David Pattison said: “As companies become increasingly desperate to win sales or to retain existing cusomters against aggressive competition, they are forced to ‘up the ante’.
“By reducing prices, extending special sales terms, or putting more value into their services, many must take a hit on their margins. You could argue that this is because the customer has so much choice.”
The survey identifies 180 weakening companies but said that 470 are so strong that any downturn in profitability is just an inconvenience.
