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Paper and board companies begin profitability turnabout

The good news this month is that there has been a marked fall in the number of companies making a loss in the UK paper and board industry, according to new research from analysts Plimsoll. Clearly, companies have battened down the hatches and rebuilt their profitability to give themselves the best chance of riding out the current economic turbulence.

David Pattison, senior analyst on the latest report tells us that when Plimsoll examined profitability in the paper and board market last year, they found millions of pounds worth of profit being wasted. In this latest analysis, the number of companies making a loss has fallen from 312 to 238.

It’s quite remarkable that so many companies have managed to rebuild their profitability during the worst trading conditions in recent memory.

Pattison also reserves special praise for the 142 “profit kings” – the companies that are leading this profitability renaissance. While the average profit margin hovers around 3%, these firms are averaging 13%. To achieve these results in a tight market is really testament to how well these busineses are managed.

Naturally, not all of the 824 companies analysed in the report have got it right and Plimsoll warns that, while there is good news elsewhere, it is worth remembering there are still 238 companies making a loss, 145 of which are doing so for the second or even third year running. What’s more, many of these loss-making companies have seen their debts rise in the same period. Plimsoll has issued a ‘danger rating’ for 110 companies in the report as a result of this “toxic mix”.

The new Plimsoll Analysis – Paper & Board tells you which companies are following the right strategy and those heading in the wrong direction, with an individual commercial, strategic and financial study of each of the top 824 companies in the market. (Readers of Converting Today are entitled to a £50 discount. Call +44 (0)1642 626400 for further details and quote reference PR/PI40).

In this issue of Converting Today we start with Part 1 of our news countdown to the massive Drupa exhibition in May (see Features section). Part 2 will be in the April issue. And we have a special report on labelling technologies that includes a look at the global release liner sector (Features section).

Felicity Murray, Editor


Felicity Murray