2005 looks set to be a year of caution. A survey by Plimsoll Publishing has revealed that the top 1000 companies in the UK windows & doors industry are in one of four different moods based on their current financial strength. It appears that 42 per cent seem to be entering 2005 in a cautious mood.

David Pattison, Senior Analyst at Plimsoll maintains: ‘There is evidence that there concerns are justified, with 45% of this year’s entrants suffering a fall in profit since last year’s study. This supports the fact that margins are coming under increasing pressure.’ He puts 2004 market growth at 1o% and estimates 2005’s down to 7%. The four moods are:

Cautious

42% of companies in the industry are uncertain how 2005 will be. Their recent financial performance has been at best satisfactory. Their sales are only increasing by 0.5% with margins averaging 4.7%. Nevertheless, most of these companies could be described as prudent as they hardly carry any debts. If 2005 proves unfavourable, their balance sheets should offer some protection, but they must keep a close eye on aggressive competitors.

Upbeat

25% of companies are upbeat regarding their prospects for 2005. These companies are not having any trouble achieving sales growth, with many having increased sales by 17.7%. They are also not seeing any reduction in margins – typically they reported margins as high as 7.4%. Their priority for 2005 should be to build on their existing success. This will not be easy in today’s highly competitive industry.

Gung-ho

15% of companies included seem almost bullish about 2005. They appear determined to press on with their aggressive pursuit of market share. These companies share most of the growth in the market last year. It is an exciting time to be at one of these companies as employment is up from last year. Most are selling at a loss, a trend currently popular in the industry. Can they maintan this risky strategy?

Under pressure

18% of companies surveyed are finding the market more competitive than ever. They all reported falling sales, some by as much as 7%. Clearly this has affected their profitability as three quarters of these companies are selling at a loss. Their priority in 2005 should be to hang on to current sales, get on top of their costs, and reduce their levels of debt.

The latest edition of the Plimsoll Portfolio Analysis – Windows & Doors individually assesses the financial performance of the industry’s leading 1000 players. The 1248 page analysis is available for £305 (paper) or £499+VAT (electronic). Order by visiting www.plimsoll.co.uk or calling 01642 626400. Glass Age readers receive a 5% discount.

Source

Glass Age