Plimsoll Publishing, the worlds leading provider of market reports and company analysis, says a quarter of companies in the UK potato industry are making a loss as the recession continues to bite.
But how many of these 83 loss making companies have simply had a bad year and how many are burying their head in the sand is the subject of a new study.
David Pattison, author of a new market report into company performance in the market says, "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, market conditions are a flimsy excuse for a band of serial loss makers that are prevalent in the market."
The study shows that 38 companies are making a loss for the second, and in some cases, even third year running.
Pattison continues, "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."
Mr Pattison congratulates management teams who have had the courage to make difficult and unpopular decisions.
He adds: "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."
The study 'Plimsoll Industry Analysis - Potatoes' provides an assessment of 270 companies in the market.
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