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Some 84 heating firms labelled 'dead wood'

The author of a new report called 'An assessment of the top 1,000 companies in the UK Heating Contractors industry' says 227 firms in the market will finish 2009 in financial difficulty and 84 have been described as 'dead wood'.
In his review of the sector in the last 12 months, David Pattison's Plimsoll report states the market is due a prolonged period of consolidation with the number of companies in trouble leading to heightened takeover activity.

Pattison said: 'With too many companies chasing weakened demand it is inevitable that there are likely to be a number of high profile mergers and takeovers. In all honesty it’s long overdue. This period of consolidation is needed to sort out the dead wood. We have named 84 companies as the best acquisition prospects in the market”.

He added:“Having clung on through the bad times many of these struggling companies are going to run out of time and fail just before the recovery really takes hold. Sadly, some of them are just too weak to carry on and there will be a spike of failures in the New Year”.

The report also had some good news. Pattison said:“A number of companies have managed to improve their performance in the latest year. They are part of a band of 535 companies that prove success can still be achieved in the heating contractors industry despite difficult trading conditions”.

The report highlighted the presence of reckless companies that continue to chase sales despite mounting losses. The author stated: “There are a group of 101 serial loss makers still operating in the market. For the second and even third year running these companies have made a loss. Whether they are blatantly chasing sales or just trying to maintain their market share, something has to give. The recession has put prudence back at the forefront of boardroom strategy and these companies have to cut their cloth accordingly or face the consequences”.

The 2010 edition of the Plimsoll Industry Analysis shows a buffeted market emerging from recession with a third of the 1,000 companies analysed in the report described as making a loss. The report is available now. Readers of Heating & Ventilating Review (HVR) will get a £50 discount if they call 01642 626400 and quote reference PR/AA10.
3 November 2009

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