Out of the top 800 poultry companies in the UK almost half are seeing good profits and healthy sales growth while the rest of the market is highly fragmented, says the latest Plimsoll Analysis
The report highlights how the poultry industry is divided between, highly profitable companies (365), stagnating but profitable businesses (80), companies running at a loss in order to fund growth (113) and companies which are failing (194).
“It’s undoubtedly tough out there with demand still subdued and costs rising all the time. With too many companies chasing too little market, many are finding it difficult to pass on rising costs to customers,” said David Pattison, author of the new Plimsoll Analysis.
“As a result we have seen profitability fall with average margins in the market now down to 1%”.
The highly profitable businesses have, according to Plimsoll, above average sales growth and profit margins of 2% with little debt, but their challenge is to maintain their performance, perhaps by buying out struggling competitors.
The stagnating but profitable businesses have healthy profit margins and little or no formal debt, but they aren’t growing and need to focus their attention on increasing profits and growing their business.
Those companies running at a loss are growing at breakneck speed but profits are being sacrificed, they need to focusing on returning to profitability.
Failing companies need to pay down high levels of debt, around 24% of sales, and increase their profit margins, currently averaging at -1% and falling. To achieve these aims they can downsize their business, focus on profitable parts or look for a buyer.