BPF survey paints a positive plastics picture
By PRW Staff
Posted 12 July 2012
The BPF presented a picture of improving profitability and optimism in the UK plastics sector at a meeting with senior Bank of England officials. Deputy governor, Charlie Bean, and the Bank's agent for Greater London, Peter Andrews, heard that 71% of the respondents to the latest survey are forecasting an increase in UK sales in the next 12 months, a considerable increase on the 54% reported in the January survey.
Peter Davis, BPF's director general, said: “Our survey attracted 64 responses and exuded a UK plastics industry which is confident about business trends over the next twelve months in both sales and profitability, helped by more stability in raw materials availability and cost.”
Of those predicting a turnover increase 23% expected sales to be up by 2-5%, 21% forecast an increase of 6-10%, 16% forecast an increase of 11-20% and 9% expected rises of more than 21%. Twenty-four percent expected no growth and only 5% a decrease. The most positive sectors were moulders, polymer producers and recyclers.
Over the past year 64% of respondents said their profit margin had increased because of new products and projects, management and cost efficiencies and reduced material costs. Fifteen percent had no change in their profit margins while 31% experienced a decrease, principally due to government/NHS cutbacks, increased raw material prices, or energy and labour costs.
Looking ahead 12 months, 48% of respondents were expecting no change in their profit margin. Of the 45% that were expecting their profit margins to grow, 21% expected their profit margin to increase by 1-5%, 16% by 6-10% and 8% by 11-20%. Reasons cited for the expected increases were cost reductions, greater production efficiency and volume growth. Just 7% expected a decrease over the next 12 months.
“Plastics companies have had to focus their minds on reducing cost and increasing efficiency,” said Davis.
On staffing, 53% of respondents did not plan to increase staff levels in the next twelve months – this is more than the January survey (45%) – while 35% were planning to increase staff and 12% will reduce staff.
Of the 61% of respondents who export most there was an expectation that sales to Western European will be unchanged. A large number of the companies polled which are active in markets outside of Europe expect to see growth in places such as North America, South America and Africa in the next 12 months.
“Europe is a big market but growth prospects are poor. It’s good to see many companies seeking business in overseas growth markets,” explained Davis.
Eighty-four present of respondents were not having difficulties getting supplies of plastics raw materials and additives. This is a big change on the BPF’s June 2011 survey when 42% were not having difficulties. It shows supply difficulties have eased, claimed the federation.
Respondents were asked if they were experiencing price increases or decreases. Twenty-six percent were experiencing increases, 49% no change, 25% decreases. Many mentioned volatility in the marketplace. This is a substantial change from the June 2011 survey where all respondents were experiencing substantial price hikes.
Forty-seven percent of respondents planned to invest a little in plant and equipment over the next 12 months, whereas 31% will invest significantly. Moulders and composite firms were evident in the latter. Twenty-two percent plan no investments.
BPF president Philip Watkins, who chaired the meeting, said: "It was a good discussion on business trends and valuable for the Bank and the BIS officials who also attended to hear directly from our members their experiences in the markets we supply and on the availability of finance.
“Supplying into all manufacturing sectors, the plastics industry is a key indicator of the state of the manufacturing economy and we were able to provide expert commentary on conditions in diverse areas such as the buoyant automotive sector and the more hard pressed construction sector."
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