New research suggest that one in five fresh produce companies are making a loss, offering an explanation for the recent wave of takeovers and mergers.

Business analyst Plimsoll suggests in its new study that the British fresh produce industry is wasting £387m worth of profit every year.

The report finds that:

19 percent of companies are making a loss

8 percent are losing money for the second year running

7 percent of companies made less than 3 percent return on investment.

“At the moment, that money is being simply thrown away because of companies’ failure to control their losses and manage their businesses more effectively,” Plimsoll suggests, adding that ‘a staggering 740 of the 1000 companies covered would make more profit under new ownership, resulting in £387m extra revenue in the industry as a whole.’

The senior analyst on the project, David Pattison, said: “It’s certainly no surprise that trade buyers and private financiers are taking a close look at the industry - some of these fresh produce businesses have huge potential that is not being realised at the moment.” “We’ve heard a lot about private equity firms recently, and this is one industry where they could reap rich rewards.”

The Plimsoll report highlights each firm’s hidden potential and demonstrates how simple changes can transform both the performance and overall value of a company.

Some of the classic strategies which companies are failing to put in place are said to include cutting out unprofitable sales, looking again at unnecessary stock levels and keeping control of trade debtors to free up cash, reducing borrowing to improve profitability, and reviewing productivity to the point where sales per staff member are at least £240,000.