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Rising Costs Driving Down Profits

8.33am 24th March 2011 - Management Topics - This story was updated on Monday, June 27th, 2011

According to new research from market analysts, Plimsoll, one in two companies in the UK Golf Courses & Clubs industry are making a loss. Many in the market are finding it difficult to pass on the pain of cost inflation to their customers as competitive pressure is restricting their pricing power.

David Pattison of Plimsoll

David Pattison, lead analyst and author of the new Plimsoll Analysis, explains the growing problem in the market: “Whether its fuel, materials or wage demands every company in the UK Golf Courses & Clubs industry is being squeezed by ever increasing costs. 52% of companies have seen their gross margin fall in the latest year.

“Unfortunately, many are reluctant to pass on price rises for fear of losing customers to cost savvy competitors. However, falling profit margins across the industry is the first warning sign that this strategy has become unsustainable.”

Pattison continues: “Over the past two years the average profit margin in the UK Golf Courses & Clubs industry has fallen to 1%. More worryingly, 452 companies are losing money with 307 of these doing so for the second year running. These companies face a tough decision – protect their market share and continue to lose money or adjust their prices to reflect their increased costs. Without refocusing on the bottom line, many of these companies will simply run out of cash.”

Pattison goes on to explain that it is not all bad news though and that many companies are getting it right, “313 companies have managed to actually increase their profit margins over the same period, he sais. “In all 515 companies have managed to stay in the black despite rising costs. Clearly, operating profitably in the UK Golf Courses & Clubs industry is difficult but not, as yet, impossible.”

The new Plimsoll Analysis – Golf Courses & Clubs will tell readers instantly which companies are prospering in the post-recession market place, those set to be bought out and those heading for trouble – across the whole of the market and in the individual regions.

It gives an instant performance rating on 967 companies and highlights those ripe for acquisition. Each company is assessed using the Plimsoll Model – A graphical and written analysis that lays bare the facts and gives you instant opinion.

Readers of Golf Business News are entitled to a £50 discount of this new special edition of the Plimsoll Industry Analysis – Golf Courses & Clubs. Call 01642 626400 for further details and quote reference PR/LI31.

Plimsoll Publishing Ltd www.plimsoll.co.uk

       

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