Energy management firms, beware – new research claims as many as a third of the UK’s largest companies in the sector are at risk of financial meltdown.
Analysis of the UK’s biggest 290 energy management services firms suggests 90 of them could be forced out of business.
These businesses are in the “danger” zone and need to take a sharp look at their operations. They could need anything from an injection of cash, “radical” cost cutting or financial restructuring to survive, according to Plimsoll.
David Pattison, Plimsoll’s Senior Analyst said: “It is clear from this study the Energy Management Services market is going through a period of great change and the market is highly competitive. These 90 companies rated as danger are clearly operating under financial pressure and many risk being forced out of the market.”
There are another 27 firms which must take caution, according to the research which is based on an investigation of the overall financial performance of the businesses.
The doomsayers pick out the warning signs for firms in the “danger” zone. Failing companies will usually have a fall in sales or a decline in profitability compared to their to investment, a rise in total debts, fall in shareholder equity or be more exposed to creditors, according to the research,
Around two thirds of energy management firms can breathe a sigh of relief if the analysis is to be believed, with 205 rated as “strong”, while 23 companies described as in good health and 37 as mediocre.