Global Edition

 

Industry analysts paint bleak picture

7.32am 26th June 2008 - Management Topics

GBN readers wanting confirmation of how tough the market is need look no further than the latest findings from industry analysts Plimsoll Publishing Ltd. Their latest report confirms that zero growth, sliding profits and escalating debts have pushed a third of UK golf businesses to the brink of failure.

Plimsoll has produced a financial health check for each of the top 846 companies in the UK golf industry. The list includes golf club operators, retailers, equipment suppliers and service providers. It reveals that consolidation is essential as supply is outstripping demand. All companies are having a difficult trade off between protecting margins and appeasing price sensitive customers.

Plimsoll has rated each of the UK’s largest golf companies into one of five financial ratings based on their overall financial performance. Ratings have been given as Strong (The best performing in the market); Good (Improving overall financial performance); Mediocre (In transition, a make or break year); Caution (A weakening financial position); and Danger (Need to change in order to survive).

The numbers in each category are as follows:
• Strong  241
• Good   45
• Mediocre  63
• Caution  86
• Danger  411

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 golf courses & clubs market and crucially who is most exposed.

“Of most concern are the 411 firms who have been rated as ‘Danger’. These firms are being hit the hardest. The numbers are stark – profit margins falling to only -1% 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, “I think these figures just prove the point that we have all been aware of that a period of consolidation is long overdue. Bit by bit the weaker players will be removed from the market.

“A period of consolidation will obviously have consequences, aside from the obvious job losses. The report suggests that up to 454 companies might need to shed jobs. For some businesses as many as 30% of the payroll may have to go if the company is to survive.

“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.

“Those companies rated as ‘Strong’ and ‘Good’ offer some room for optimism. Benefiting from stronger business models and tighter financial management these companies are ideally placed to benefit from the fall-out in the market.”

This special edition of the Plimsoll Analysis lists the names, details and financial performance of many of the UK’s leading golf businesses. It also includes a future snapshot on each company demonstrating how each might survive this period of consolidation. It names those companies that are set up to gain the most and those that need to retreat or sell up.

Copies of the analysis can be obtained for £350. Readers of GBN can obtain a special discount of £50 by calling Clair Sherwood on 01642 626400 or emailing c.sherwood@plimsoll.co.uk.

For a list of companies included in Plimsoll Publishing’s golf survey go to www.plimsoll.co.uk and enter ‘golf’ in the search box.

       

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