Make borrowed cash work, analyst warns

By FWi staff

RESEARCH into the debt burden of agri-businesses has uncovered some worrying trends, according to market analyst Plimsoll.

The survey, which looked at the top 1000 companies, reveals over 43% increased their level of debt last year.

David Pattison, general manager at Plimsoll, believes some are doing this to finance losses and stay afloat. Other firms think additional investment will lead to higher returns.

What concerns him is that only 44% of those companies which increased their debt managed to deliver improved profits.

“Borrowing extra money is not necessarily a bad thing but it should give results,” says Mr Pattison.

“The margins in the industry are very tight at the moment making it difficult to clear debts.”

However, he also thinks that sitting on large deposits can also be dangerous.

“Cash will not earn a great return sitting doing nothing. Now could be the time to seek out an exposed competitor and snap them up.”

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