Santander’s Business Confidence Index reveals 70 percent of construction and building services companies have seen profits fall in past six months.
Construction and building services businesses are among the least confident about their prospects for the next six months compared with other industries, according to new research* from Santander. And the figures show nearly five times the number of firms suffered profit falls in the past six months as those that experienced rises, with 70 percent reporting declines compared with 15 percent recording increased profits.
The Santander Business Confidence Index reveals that 56 percent of construction and building services business owners are confident in the prospects of their own business for the first half of 2010. This represents a substantial drop on the 73 percent who were optimistic when the research was first conducted in September 2009.
Almost one in 12 (eight percent) firms are very confident while 48 percent are confident about the future with 37 percent not very confident and seven percent not at all confident.
Confidence in the construction and building services sector is much lower than the national average which showed that 74 percent of firms were optimistic about the next six months. The national average has stalled since September 2009 when 75 percent of companies were confident about their prospects.
But confidence is higher among firms with turnovers of £25 million plus – 81 percent of those firms say they are either ‘very confident’ or ‘confident’ about their prospects and report average profit rises in the past six months of 14.1 percent.
PROFIT PRESSURE
The national analysis shows that it is the continuing squeeze on profits that is holding back confidence – 50 percent of companies say profits fell in the second half of 2009 compared with 21 percent which reported an increase.
The average profit fall in the past six months is 16 percent compared with the average rise of 13.7 percent. Profit decreases were highest among firms with an annual turnover of less than £1 million.
However in the construction and building services sector 70 percent of firms have reported declines in profits while 15 percent have seen rises. The average fall in profits is 17.8 percent while the average rise is 15.9 percent.
Firms supplying the Government/ public sector saw the biggest average increase in profits at 19 percent with the health/medical sector recording average profit rises of 17.6 percent.
BUSINESS OWNERS' CONFIDENCE IN THEIR PROSPECTS FOR THE NEXT SIX MONTHS
Five most confident business sectors:
1) Health/Medical
2) Technology/IT/Telecoms
3) Advertising/Marketing
4) Charity
5) Manufacturing
Five least confident business sectors:
1) Construction/Building services
2) Transport
3) Energy
= 4 Travel
= 4 Agriculture
Tim Neal, Senior Manager Business Development at Alliance & Leicester Business Banking, said: “The construction and building services sector is struggling for confidence with the pressure on profits the main reason for it being below the national average.
“The official end of the recession marks a turning point but sustained recovery and growth will be challenging, requiring support from the banking industry; Santander’s strategy of building its presence in the UK corporate and commercial banking market is characterised by the focus we have on working with our customers to understand their businesses and provide solutions that reflect that understanding. We have seen a significant increase in the number of businesses that are attracted to working with us as they position their businesses for the future.”
* Research conducted online among 873 small and medium-sized businesses between 19 January and 4 February 2010 on behalf of Santander by Telegraph Business Club.
For further information on the full range of services available from Alliance & Leicester Business Banking, FMB members should visit:
www.alliance-leicestercommercialbank.co.uk/FMB
