According to a new study, 292 out of 1,000 UK sheet metal fabrication companies are showing the effects of ‘financial stress’.
Plimsoll Publishing, who conducted the study, identifies the effects as thus:
Over the last 4 years, 292 UK Metal Fabricators companies have fallen into the following cycle: 1st stage – overtrading – many of these companies are suffering from overtrading.
They are attempting to maintain or increase sales at the expense of margin, while investing heavily at the same time.
The result is a reduced return on investment.
2nd stage – low profitability – two years of margin erosion has left these companies with very low pre-tax margins, averaging only -2.3% Almost one third of these companies are loss making.
Any benefit from rising sales has been outstripped by rising costs.
3rd stage – high levels of debt – heavy investment, declining margins and in some cases loss financing have led to unacceptable levels of debt, averaging at 28% of turnover.
So much for speculate to accumulate.
Read the whole article here.