A report by industry analysts has some unwelcome news for those involved in the UK CCTV industry, it is claimed.
Overtrading appears to be affecting the industry as 117 significant players chase sales at the expense of profitability, according to the latest Plimsoll report.
While behaviour of these overtrading companies has yet to impact on all of the 470 companies in the industry, almost half have seen their profitability decline. There are three distinct types of company behaviour now prevalent in the industry, the analysts claim.
Overtrading
Some 117 companies are losing money. Typically they are delivering minus 4.2pc margins, yet their average sales growth is healthy. Is their strategy of capturing market share at the expense of profit sustainable?
Under pressure
Some 187 companies hardly break even. Typically these companies exist on tight and declining margins. Can they remain competitive whilst being squeezed by those overtrading? As yet unaffected 166 companies are as yet unaffected. Typically these companies have remained very profitable, delivering 5pc margins. Will their profit stream be jeopardised by those overtrading?
What they say
David Pattison, Senior Analyst at Plimsoll claims: "The good times could be passing; profits are certainly falling. Worryingly, well over half of the 470 companies assessed have seen their profits slump. In an attempt to retain sales, 117 companies have already started to blatantly overtrade, selling at a loss. As these companies continue to over-trade, I see two potential outcomes. Firstly, prices could fall across the industry as competition increases. Alternatively, the ‘overtraders’ will simply run out of money."
This latest publication lays bare, it is claimed, the true financial performance of all 470 companies, separating the 117 overtrading and 187 where profits are too low, from the 166 as yet unaffected. The most up to date accounts have been included for each of the companies analysed.
The 600 page analysis of the UK CCTV industry is available for £305 (paper) or £499 plus VAT (Electronic). Order by visiting the firm’s website or calling 01642 626400. Readers of this publication will receive a 5pc discount.
