Contractor eat contractor?
May 28th 2008 Massive congestion amongst the UK’s largest Cleaning Services companies is putting unprecedented pressure on the managers of these companies to keep their companies in the market, says a new study by Plimsoll Publishing.
The study found that the UK’s largest 100 companies now control 88% of the market, an increase from 84% 2 years ago. As a result, these major companies are fighting each other headlong in a battle for market share. The latest results leave us in no doubt that this is having a huge impact on their financial performance.
Of the 100 Cleaning Services companies surveyed:
23 of the companies are showing no sales increases at all
26 are selling less than they were 2 years ago
59 companies have failed to increase sales at the same rate as their investment.
50 companies increased their debts simply to hold their place in the market.
David Pattison, senior analyst with Plimsoll, comments: “The recent slow down in the UK economy will only accelerate a long standing problem in the market. Following the last few years which have been largely profitable, business leaders have been keen to invest heavily, and in turn have borrowed heavily. Yet due to the turbulent economic climate of 2008 they are seeing very little by way of return. This ambitious investment strategy has left some companies in severe financial danger, and as a result 17 companies have been awarded a danger rating in this study as result of their failing business strategy.”
Pattison continues “The consequences are serious; these companies need to have serious rethink when it comes to their business models. It’s likely that jobs will be lost and key projects could be cancelled in an attempt to control the spending- but for some companies it could well be a case of too little, too late.
It’s likely that the management at some of these companies could be changed to accelerate the cutback process, as it’s a lot easier for new managers to come in with a clear remit and instigate these tough decisions. The other obvious option is that some of these businesses will be sold off.”
Supporting the opinion for a sell off, the full 272 paged analyses suggests that the value of these 100 companies has fallen by around 40% in the last 12 months. Plimsoll’s report identifies the companies who are prime potential acquisition targets.
Pattison continues, “Despite the turmoil in financial markets, there is no doubting this is an ideal opportunity for the more visionary leaders in the market to steal some ground on their competitors by buying up one of these weakened players. It’s a great time to go on the offensive- if you have the cash reserves to do it without placing your own business in jeopardy.”
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