Nearly a third of fresh produce companies will see a dip in profits next year, according to the latest Plimsoll analysis.
The publisher found that, while 2006 has been a highly competitive year for the UK sector, 2007 promises even tougher times.
“Although some companies have been enjoying historically high margins, more than two-thirds of the 500 firms monitored by Plimsoll have seen a drop in sales,” said senior analyst at Plimsoll, David Pattison.
“While growth was a healthy five per cent, well above inflation, much of the growth is being shared by a select band of firms.
“The effect has been that the industry has begun heading in a new direction, and the companies which have found themselves lagging behind have been slow to recognise this.”
Pattison believes this trend is set to continue in 2007. “I see growth slowing in the coming 12 months, although still above four per cent, with the small group of market leaders again capturing the lion’s share and the others increasingly playing catch-up.”
Overall margins in 2006 were at 2.2 per cent, according to the Plimsoll portfolio analysis, with some companies enjoying a record 20 per cent or more.
But these margins will be squeezed in 2007, and at least a third of companies in the sector will lose money.
Directors’ fees are likely to take a hit next year and the 16 per cent rise of the past 12 months on the previous period is unlikely to be repeated in 2007, according to Plimsoll.
In the past 18 months, 170 directors have taken up new posts. “If they start to have an impact on company performance in 2007, competition could be even more intense,” Pattison warned.
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