1 in 5 Civil Engineering Contractors are making an operating loss according to new research by Plimsoll.
Author of the new report, David Pattison, said: “Increasingly we are seeing companies making a loss for the first time in their history and I think they can rightly claim they are victims of difficult trading conditions. A quick refocus on profitability would ensure this an isolated occurrence – ‘the year the recession forced us into loss’.
However: “66 companies are making a loss for the second, even third year running. These companies are either blatantly undercutting the rest of the market to enhance or maintain market share or, more likely, have delayed making the painful decision more prudent companies have made recently.
“No one wants to trim costs, lay off staff, cancel dividend payments and the like but continuing on regardless is fast becoming unviable. They can’t bury their heads in the sand any longer,” he said.
The survey of 1000 companies found 206 to be loss-making. “I congratulate the management teams that have made the often difficult and unpopular decisions. They have cut their cloth according to the market conditions and as a result are more stable for it. Those failing to do so are running out of time and cash. Without a big increase in demand they cannot support their pricing strategy for much longer. Watch out for a number of failures in the coming months among the companies we have identified”.