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£485 million - the cost of the recession

Published 6th December, 2009 by Neil Nixon

£485 million - the cost of the recession

The recession has cost the UK cleaning services industry £485 million in lost profit in the last year according to new research by market analysts Plimsoll.

David Pattison, senior analyst and author of the Plimsoll Analysis – Cleaning Services, said: “The recession has hit the sector hard with more than half of the companies analysed in our new report making less profit than they were a year before. The bill in lost profits stands at £485 million.”

When pressed for a reason for this collapse in the bottom line of companies throughout the market, Pattison suggested: “With demand so subdued and the resultant competition, many companies are unable to charge the price they need to make healthy profit margins. In the absence of pricing power many companies will have to make painful but necessary cutbacks in the next 12 month.”

However, the burden of lost profit is not being shared equally according to Pattison: “570 companies have bore the brunt of the downturn. These companies have seen their profit margins decimated and in the absence of a big upturn in demand will have to cut their cloth accordingly. Watch out for further job losses and closures as these companies as they look to claw themselves back to profit next year. If they fail to act quickly they could find themselves running out of cash.”

On the other hand, there are still companies getting it right in spite of it all. “Amazingly, there are 149 companies that have maintained or increased their profit margins in the last year. All things considered that’s a pretty good achievement. While some of these companies made cut backs to match their lower sales expectations others have managed the Holy Grail – they have grown their business and increased their profit margins in a recession. Those companies prove that an efficient business selling the right product to the right market can still succeed in the UK Cleaning Services industry.”

The new Plimsoll Industry Analysis – Cleaning Services gives an instant performance rating on the top 1000 companies in the market. Each company has been rated as Strong, Good, Mediocre, Caution or Danger according to their latest performance. A graphical and written analysis will tell you which companies are in trouble and who is getting it right.

Readers of Cleaning and Maintenance are entitled to a £50 discount of this new special edition of the Plimsoll Industry Analysis – Cleaning Services. Call 01642 626400 for further details and quote reference PR/SV20.