Friday 21st Oct 2016 - Logistics Manager

Forklift market set for consolidation

Takeovers and sell-offs will sweep the UK fork lift trucks market, according to a new study report by Plimsoll Publishing. It says a combination of needs is forcing smaller companies to consider selling to their larger rivals and larger players are looking to buy their smaller rivals to diversify and develop their businesses.

Senior analyst David Pattison said: “It has a great deal to do with necessity. Many of the larger players in the market, despite the downturn, are desperate to find new ways to develop their business, but with the current climate, costs are being cut and business development is being slashed. So they need options to help them protect their futures and tap into exiting revenue and profit streams. Financing a series of small acquisitions at key niche players in the market will give them two clear benefits: a quick route to increasing sales for relevantly low cost, and a foothold in the emerging sectors of the market.

Plimsoll argues that for the past few years the larger companies have been surviving on wafer thin margins, most only making 1.8 per cent or less. “50 of the UK’s top 481 players are actually losing money at the moment. This is evidence that their strategy of chasing sales and volume compromises profits.”

Meanwhile at the other end of the market, an emerging group 98 companies, are smaller, high focused players. These fast-growing companies have been able to carve out niche markets for themselves, some with premium profit margins.

However, despite the excellent returns there now seems to be an eagerness to sell from many of owners. Several factors are at play here: a combination of their businesses now reaching a critical point in their development, twinned with the tightening of credit and a reluctance of the money markets to finance the next phase of development.