19 January 1996

UKs firm improvement

DESPITE a slowing rate of sales growth in the past year, UK farming companies are consolidating and strengthening their financial position, according to analysis by Plimsoll Publishing.

Average increases in turnover came to 8% compared with 12% in 1994, though almost half the companies surveyed managed some improvement in sales.

It was also a good year for margins, with pre-tax profits averaging out at 5% of turnover. This was the same as last year, with small farming companies making a 6% margin and large ones 4%. But a quarter of all businesses surveyed still made a loss.

According to the analysis, the number of farming companies rated financially "strong" or "good" has risen 2% in the past year to 36%, while the number ranked as "caution" or "danger" has fallen 5% to 47%. "The balance is improving, indicating that more are consolidating and strengthening their financial position," said a spokesman.

Despite this, within the group of smallest farming companies, 60% are listed as "caution/danger" compared with just 33% in the largest group. Plimsoll also reports 142 farming company collapses in the past two years.

Meanwhile, agri-business has achieved a 1% sales rise in the past year to 9% and a 1% profit margin rise to 4%. The sector has also achieved a similar improvement in the ratio of strong to weak operators (see chart). &#42