Global Edition

 

Not so Happy New Year in Golf Equipment Market

8.30am 19th December 2006 - Management Topics

2006 has been a highly competitive year for the golf equipment industry, although some companies have been enjoying historically high margins. But 2007 promises even tougher times, according to David Pattison, senior analyst with Plimsoll, one of the leading business performance analysts in the UK, France and Japan. His findings are based on Plimsoll’s Portfolio Analysis – Golf Equipment.

“No-one looking at the golf equipment market over the past 12 months could describe it as a comfortable environment,” says David.

“The market declined, falling 5.1% on the year. Around two thirds of the 140 companies monitored by Plimsoll saw a fall in sales. This indicates that much of the growth is being shared by a select band of firms. The effect has been that the industry has begun heading in a new direction and the companies which have found themselves lagging behind have been slow to recognise this.

“In 2007, this trend is set to continue. The prospects for any growth in the market next year are slim, with the small group of market leaders again capturing the lion’s share and the others increasingly playing catch-up.

“Overall margins in 2006 were low at 1.7%. Some companies enjoyed a record 20% or more. But I believe these margins will be squeezed in 2007, and at least a third of companies in the sector will lose money. In common with the OECD, I don’t see interest rates having a major impact.

“Finally, the Plimsoll Portfolio Analysis – Golf Equipment indicates that a small number of companies have a large amount of cash at their disposal. This, combined with the small amount of organic growth in the market, will allow some of them to consider acquisitions in 2007. In the report, I have selected five companies I think will be taken over during the coming year.

The complete Plimsoll publication contains an individual analysis of each of the 140 companies in this sector and sets out their challenges for the next 12 months. Copies are available from www.plimsoll.co.uk, by emailing c.sherwood@plimsoll.co.uk or by calling 01642 626400 and quoting reference PR 12. Readers of Golf Business News.com are offered the special price of £300 instead of the usual £350.

Next month, Plimsoll will be researching new growth areas of the market.

       

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