Lost Profit “Costing Companies Millions”

The British telecommunications services industry is wasting £1.8bn worth of profit every year, according to a new study by business analysts Plimsoll Publishing.

The report finds that:

31 companies are making a loss
19 are losing money for the second year running
5 made less than 3% return on investment

The findings suggest that a staggering 739 of the 1000 companies covered would make more profit under new ownership, resulting in £1.8bn extra revenue in the industry as a whole. At the moment, that money is being simply thrown away because of companies’ failure to control their losses and manage their businesses more effectively.

The senior analyst on the project, David Pattison, said: “These results prove just why the telecommunications services industry is currently hot with takeover talk and speculation about future ownership. It’s certainly no surprise that trade buyers and private financiers are taking a close look at the industry – some of these telecommunications services businesses have huge potential that is not being realised at the moment. We’ve heard a lot about private equity firms recently, and this is one industry where they could reap rich rewards.”

The Plimsoll report highlights each firm’s hidden potential and demonstrates how simple changes can transform both the performance and overall value of a company. Some of the classic strategies which companies are failing to put in place include:

– Cutting out unprofitable sales. In some cases, a 10% drop in sales could actually improve profitability

– Looking again at unnecessary stock levels and keeping control of trade debtors to free up cash

– Reducing borrowing to improve profitability

– Reviewing productivity to the point where sales per staff member are at least £170,000. This is a key business measure that often goes unchecked.

The new Plimsoll analysis of the telecommunications services industry applies the same tests to each business that any corporate investor would, identifying a “profit plan” for each one and outlining its strengths and weaknesses in an easy to understand format.

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