At 23 per cent, almost a quarter of the recycling companies were given a ‘danger’ rating meaning their survival is now in question. Another 15 per cent were given a ‘caution’ rating, warning they are in a weakened financial position.
Plimsoll senior analyst David Pattison said: “It was no real surprise to see the high number of companies on the danger list given the current economic crisis affecting the recycling industry. Obviously there are real concerns over the 388 firms rated as ‘caution’ and ‘danger’. Their futures look extremely uncertain. Their management are now operating under severe financial pressure where even normal trading is proving hazardous. Many of these firms seem likely to be sold off.”
Companies were given a one to five rating based on their overall financial performance. They were marked on sales growth, profit margins, levels of debt, and efficiency.
The 34 per cent of those ‘strong’ firms had, on average, increased sales by 14.8 per cent, had profit margins of 9.4 per cent and were mostly debt-free, achieved through cutting costs and using competitive buying.
Pattison added: “We were very surprised to see the high number of excellent businesses making it on to the strong list. I think these firms have upped their game in these difficult times and they are concrete proof that necessity is the mother of invention.”