For the past couple of years, the headlines have been full of economic tales of woe and hardship. 2020 was dominated by existential crises as we wondered if life and business would ever get back to normal. The post-pandemic, Brexit reality of 2021 is one of the shortages in everything from CO2 to people, while inflation, debt and potential interest rate rises have heightened fears of another painful economic bust.
However, for some the past 12-18 months have been nothing short of fantastic. While crass in its context, the phrase “had a good pandemic” applies to many companies across a broad range of UK industries. Many have enjoyed huge, unexpected increases in demand and revenue. Can they build on the opportunities afforded them over recent years so they can thrive even when demand falls back to normal levels? Others are just strong companies with a solid business model. As demand cools and shortages continue to bite, will they be able to take advantage of less able rivals, or will they too see their business performance decline?
Plimsoll produces thousands of industry-specific studies that assess the performance of every leading company within them. We alert users to weaknesses in performance at their own company so that actions can be taken to address them. We also reveal which competitors are in financial difficulty and what opportunities that might mean. However, a Plimsoll Analysis is also keen to recognize outstanding performance.
The following are a few examples of companies that have enjoyed a stellar year or two:
Investors in the Hull-based food manufacturing company have seen a 74% increase over the last 5 years, and during the pandemic, their outstanding performance has continued
Despite lockdown, a much-pared back Christmas Day in 2020 and multiple pandemic crises, Cranswick has seen sales growth continue into double digits and profit margins never fell below 6% in any of the last 5 years. If there has been a consistent performer during the pandemic, Cranswick Plc is it.
Challenges do remain with staffing crises, CO2 shortages and other supply limitations likely to buffet the market for the foreseeable future. However, their move to automation should shield it where others in the slaughter market are increasingly hamstrung by a lack of staff post-Brexit.
Plimsoll’s latest analysis of the UK food manufacturing sectors highlights how Cranswick have outperformed the market. Sales growth and profit margins across the market both sit at an average of 2.3%. 358 of the market’s leading companies have been rated as Danger by Plimsoll and face an uncertain future. If shortages continue and staffing and distribution costs continue to rise, many could fail, must restructure or be acquired.
From building model planes to racing little model cars to building train sets, the lockdown has seen demand for the products in Hornby’s portfolio rocket. At the height of lockdown demand for Airfix models, Scaletrix racing sets and Hornby model railways soared to such an extent that their website crashed, and new product launches were delayed to accommodate orders already taken.
With demand for home-based activities soaring during the lockdown, group sales were up 28% on the full financial year-end to March 2021 to £48.5m. The company also posted its first profit in several years with a wafer-thin profit margin of 0.7%. However small the latest margin, it compares to a £3.4m loss in the previous period.
Clearly, a company with such precarious margins in a booming market is vulnerable to a return to normal demand levels. Notice from the AGM statement that the company is “mindful of potential supply disruption” suggests that the supply crises sweeping the UK are likely to impact the company in the crucial Christmas period. Hornby, long noted for financial weakness could see a return to loss-making if demand falls significantly.
Plimsoll’s latest analysis of the model and hobby market reveals a market that offers consistently very low margin but has seen a double-digit explosion in demand over the past 2 years. With almost a third of companies included in the new analysis rated as Caution or Danger, what next for the market as people spend more time outside the home and less time building models?
While Rightmove continues to retain a sizeable lead in the UK online property search space, OnTheMarket, Zoopla and other online providers are slowly chipping away at their position. With a white-hot UK residential property market, as more people look to upsize after being couped up with their families for the last 18 months, 4-year-old OnTheMarket has enjoyed a stellar 12 months.
The estate agency owned property search portal has seen full-year sales up 22% at £23m. 2020 marked the fledgling company’s first year of profitability, having posted a £1.1m profit for the year. Clearly, there appears to be space for more than one property search engine in the current market conditions.
However, what happens as the housing market cools, as some economists are predicting? As the stamp duty holiday ends and the economy lurches from one crisis to the next, can a quieter market reward smaller engines like OnTheMarket or will Rightmove’s scale and brand recognition leave it the last man standing?
Plimsoll’s latest analysis of UK estate agents shows that, despite “gold rush” conditions, rarely seen before in the UK property market, weakness persists. Margins across the market are down to just 1.4% as the battle for listings remains fierce, driving margins down from 3.4% in 2020. As a result, Plimsoll has rated over a third of the UK’s leading agencies as Danger. Should the property market cool as some expect, there could be sustained pain throughout 2022.
BEST OF THE BEST PLC
Few can say they have walked through the halls of the UK’s major airports or shopping malls without encountering a shiny supercar, ready for one lucky punter to win today. The success of BOTB’s modern take on the classic “spot the ball” games, whereby the winners buy the chance to win their dream car, has been nothing short of phenomenal.
While traditional lotteries have seen a gradual decline in participation over the past decade, the chance to win a dream car and a boot full of money has proved to be extremely popular, especially while people were at home and more exposed to TV and online advertising.
During the last 12 months, during the depths of the pandemic, sales have more than trebled from £18m to almost £46m. Their profit margin is a staggering 31%. The chance to win a dream car and boot stuffed with cash has clearly been enticing during the pandemic crises. However, as competition from charities and other providers intensifies, can BOTB maintain its trajectory? What USP does BOTB have that would protect it from challenger brands?
Plimsoll’s latest assessment of the UK gambling market shows an industry struggling to grow. New and novel ways of encouraging participation appear to be taking over the sector but growth has fallen to zero. Profit margins are also coming under pressure, down for the fourth year running standing at just 2.4%.
These companies and many thousands more like them have enjoyed an outstanding year or two. In fact, almost all of the industries that Plimsoll analyse have at least one company that stands out despite what is happening in the wider market. Whether it’s a company with a competitive moat that protects it from the rest or it’s an innovator that has found a new high growth / high-profit way to operate in a market, success can be achieved despite all external factors.
A Plimsoll Analysis provides the most convenient means of assessing every company in any given market. From the very large to the very small, every company is assessed using Plimsoll’s unique rating model. We bring together every company in the industries that matter to you and analyse their health, value and prospects allowing you to find those worthy of further investigation almost instantly.
To see who the winners and losers are in your market, visit www.plimsoll.co.uk and search for the industries that matter the most to you.