Profit and loss: The gulf grows

The latest Plimsoll Analysis found average profit margins have remained at 6.9% of sales but 63 of the UK's top 262 air compressors companies are now running at a loss – a finding that may cause you to think that the industry is suffering with chronic oversupply, rising costs and severe pricing issues. However, the same study has revealed 26 businesses are making record profits.

David Pattison, senior analyst at Plimsoll, said: "Sometimes the public perception of profit is wrong. It's seen as companies taking advantage of their position or exploiting their commercial advantages unfairly.  But these successful companies should be proud of their achievements. In an industry not known for its successes, these businesses should act as benchmarks to the rest of the industry showing what can be achieved.”

Key findings from the analysis:

The 26 rich companies:

• The average profit margin at these companies is 18% – way above the industry average
• 17 of these firms are operating completely debt free
• Average sales per employee figures are £ £168,400

Of the 63 poor companies

• 33 are now considered to be a high financial risk
• For 34 of these companies this is the second year in a row of making a loss
• On average these companies are losing -3% on sales – so for every £1 of sales it is costing them £1.03 to deliver

The latest Plimsoll Analysis highlights that the industry is being split into two types of company and that the gap between the rich and the poor is getting bigger and bigger.

For the companies that are falling behind, they need to re-evaluate their strategy and retain profit in order to improve their financial strength.” 

The Plimsoll Analysis, which is also available in an online format, provides an individual profile of each of the UK’s top 262 air compressors companies.  It offers an overall financial rating, a valuation as well as an acquisition attractiveness assessment on each company. 

For more information on the Air Compressors report or any of Plimsoll’s titles please contact Chris Glancey on 01642 626 419 or alternatively email [email protected]

Readers of this AirUser article are entitled to a £50 discount off this report. Simply call the number above and quote reference PR/EG01.