Industry still optimistic but fall in gross margins

The BFM has just published its latest state of trade survey together with its annual survey of financial ratios.  The industry continues to feel optimistic about the general business situation despite lower output levels and fewer new orders that were initially hoped for in February this year, when the last survey was undertaken. 

FoamMore companies are still reporting increases in raw material costs that those reporting falls, although the gap is closing and the inference is that for many products costs are at least stabilising or falling.  This is particularly noticeable for foam, but it applies to other input products too.  

Export performance was disappointing showing the worst performance for over 2 years in terms of the number of companies reporting sales overseas. 

Europe dominated the destination for exports while the percentage of companies selling goods to Russia declined significantly.

The indications are that since June last year sales have increased in the industry and this is supported byFactory Gate Prices official government data which shows to April 2015 (latest figure) an improvement in production levels of circa 8%. 

However, gross profit margins have declined which infers that more money is being spent on direct labour and/or materials than can be recovered through price increases.

The full survey report is available free to BFM members and includes: an industry analysis; reports on individual sector performance, financial ratios to sales (direct labour and materials/overheads/distribution costs/net profit); graphs showing commodity and utility price trends.