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Ups and downs

15 November 2000

According to the Construction Products Association, buildings products companies are optimistic about growth in 2001. Plimsoll, on the other hand, predict 26% of them will disappear before the end of next year.

Plimsoll Portfolio Analysis looked at 1004 companies and identified four types. The winners have low borrowings as a percent of sales and high sales growth. The chancers have high borrowings and high sales growth. Sleepers have low borrowings and low sales growth. Losers have high borrowings and low growth.

And Plimsoll predict time is running out for the losers, who have borrowed to stay in the market but are losing market share. Their average margins are 2.2% and 36% of them are making a loss.

Plimsoll say these companies cannot survive as they are. They will either fold, be taken over or be forced to change.

However, most of them do not seem to realise they are on the way out. According to the Construction Products Association building materials producers are uncommonly optimistic with a 38% net balance of firms expecting to see output increase in the next 12 months.

The Association\'s President, Roy Harrison, says the expectations of growth are based on a feeding through of the projects announced in the Government\'s Comprehensive Spending Review.

Also encouraging, he says, is that manufacturers are planning to increase investment over the next 12 months, particularly on plant and equipment and other business activities such as e-commerce. This can only lead to increasing productivity in our sector.

Plimsoll Portfolio Analysis, First Edition 2001 can be ordered by telephoning:

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