A Third of Tyre Companies ‘on the Brink of Failure’
According to Plimsoll Publishing Ltd’s latest report, zero growth, sliding profits and escalating debts have pushed a third of the UK Tyre Manufacturers & Distributors industry to the brink of failure. The report says “consolidation is essential as supply is outstripping demand. All companies are having a difficult trade off between protecting margins and appeasing price sensitive customers.”
David Pattison, senior analyst on the project, comments “A great deal has been written on the general slow down in the UK, but until now no one has measured the impact on the tyre manufacturers & distributors market and crucially who is most exposed.”
Of most concern are the 34 firms who have been rated as Danger. These firms are being hit the hardest. The numbers are stark – profit margins falling to only -2 per cent of sales, and the majority of companies in this classification are making a loss. Most are taking on debt at an alarming rate simply to cover costs.
David Pattison continues: “These companies (those rated danger) must put immediate plans in place to start to trade their way out of their problems. Cutting costs, jobs and even turning unprofitable work away- stringent measures must be put in place before it’s too late. Currently the owners are sitting on an ‘unsellable’ asset and are woefully exposed to acquirers who are ready to snap them up for next to nothing.”