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Quarter of UK motor firms are `unprofitable`

01 August, 1999

More than a quarter of companies in the UK electric motors business are not making a profit, according to a new study*. An analysis of 173 companies involved in the design, manufacture, distribution and repair of electric motors in the UK has revealed that 55 of them are not profitable and are losing money on every pound they invest.

"These companies have some tough and immediate decisions to make," says Don Turkington, managing director of Plimsoll Publishing which conducted the survey, based on accounts filed at Companies House.

The study identified a clutch of 33 companies that are generating only around 88p in sales for every £1 they invest. To exploit their capital base fully, these companies would need to lift their sales by 91%, says Plimsoll.

On average, the companies surveyed produced a return of £1.68 on every £1 they invested. This represents a slight decrease on the average figure of £1.70 when Plimsoll last surveyed the sector four years ago. The £1.68 return is equivalent to a profit of just 5.9p on every pound invested. Only one third of the motor companies studied made 10p or more - a 10% return - on their investments.

Plimsoll points out that, by comparison, the average employment agency generates sales of £3.28 and makes a 14p in profit for every £1 it invests. Only two UK motor companies achieved this level of return. To find out their names, you will have to buy the report.

Almost a quarter of companies operating in the UK motors business have suffered a drop in sales in the past four years, the survey shows. Some 70% of these firms have taken steps to reduce their costs but, according to Plimsoll, "many of these companies did not cut deep enough".

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