Price discounting and payment delays blamed for financial squeeze on the industry

Profitability and cash flow in the construction industry continued to decrease in the second quarter of 2009, according to a survey by insurance specialist Euler Hermes.

Its cash flow and profit survey of UK companies showed a series record fall in cash flow in this period and a far faster decline in profitability than in the first quarter of the year.

Building site
The survey showed a series record fall in cash flow in the second quarter

It attributed falling profitability to price discounting within the competitive environment the industry is operating within. Cash flow was also affected by increasing payment delays.

However, despite falling cash flow, the survey showed that construction companies have, in fact, sped up their payments to suppliers over the quarter, the only monitored sector to do so.