Agri-businesses not immune to credit crunch, report says

One fifth of the UK’s leading agri-business companies are at risk of financial difficulty in the current economic climate, according to the latest report from industry analysts Plimsoll.

Of 1001 companies surveyed, it rated 204 as being in ‘financial danger’, of which 98 had increased their debts last year and were carrying almost twice the level of recommended debt.

Another 128 saw profits fall last year and 90 were said to be losing money, with costs clearly ahead of sales. The report also found that 117 companies managed to increase sales last year and 156 were regarded as “well established”, having been set up over 10 years ago. But senior analyst David Pattison said that some were failing to adapt to the modern business market and were falling behind as a result.

“There is no doubt in my mind that recessions catch bad businesses out. Those companies that have entered this period ill-prepared have placed themselves at a distinct disadvantage. Many have grown used to running their businesses on high risk business models, propped up largely on finance.”

With more prudent banking systems in place, poor businesses would not be able to “paper over the cracks” by raising quick finance, he said.

Recent examples of failed businesses, such as Zavvi, Woolworths, Whittard and Wedgewood, were all rated “danger” by Plimsoll prior to their demise.

The 2009 edition of the Plimsoll Analysis- Agri-Business includes an individual analysis of each of the industry’s largest 1001 companies. The report values each company as well as rating each company on its attractiveness as an acquisition. Each of the 1001 companies analysed receives a unique Plimsoll rating showing the company’s strengths and weaknesses.