Many firms could lose out
Page 14
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MANY HIRE or reward companies are badly placed to take advantage of the opportunities confronting the industry in the mid-Eighties. This is one of the main conclusions of ICC Business Ratios' latest analysis of 100 leading companies between 1979/80 and 1981/82.
Of the 81 companies reporting their profit margins in 1981/82, a total of 29 made losses compared with 24 the previous year. The weight of interest repayments on loans has pushed several otherwise profitable companies into the red, and has left others with little to invest in 38 tonne lorries, the report says.
But the performance in the second half of the analysis period from 1980-82 showed some encouraging signs, the report states. Profits fell by 29.6 per cent during the first half of the period, but during 1980-82 rose by 6.7 per cent.
The decline in return on capital has slowed, with a 30 per cent drop between 1978/80 being reduced to one of just 2.2 per cent between 1981/82. The overall return on capital ratio stood at 9.2 per cent in 1981/82 against 9.4 per cent in the previous year.
The sector's average profit margin has stabilised at 3,3 per cent in the last two years of the period, against 5.1 per cent in 1979/80.
Future prospects for the industry still appear gloomy, but will not be as bad as recant history suggests, the report states.
Lower interest rates will already be taking some pressure off hauliers for the short term, while the economy in the long term will remain depressed and likely to remain a serious problem.
The industry will remain slow in taking full advantage of 38 tonne lorries.
Copies of the report, Road Hauliers, are available from ICC Business Ratios, 28/42 Banner Street, London EC1Y 8QE. Price £121.