Leather manufacturers and processing companies in the UK have seen profits slump by a staggering 122.1 per cent to minus £106,000 on average over the past three years according to a report from The Prospect Shop. Sales have fallen by 20.6 per cent to £12.6m too, the report says.

The report, called "Leather Manufacturers & Processors", looks at the financial performance of 60 leading companies over the past three full accounting years. It shows that profitability ratios have all witnessed decreases, growth in sales has continued to decline, and borrowing ratios have also deteriorated.

'Minus returns' for the leather industry
  • All the average profitability ratios for the leather industry have decreased over the three-year period under review.
  • Return on capital has fallen from 12.7 per cent in 1996/97 to 5.9 per cent in 1997/97, to end the period at minus 2.4 per cent
  • Return on total assets also deteriorated, falling from 6.4 per cent in 1996/97 to three per cent in 1997/98, ending with minus 1.2 per cent in 1998/99.
  • The pre-tax profit margin, which began the period at three per cent, ended the period with another negative result of minus 0.6 per cent
  • Only the return on investment figure is still positive at 3.6 per cent for 1998/99, although that too has fallen during the three-year period from 12.3 per cent in the first year of analysis, 1996/97.


Negative growth
The report also reveals that the compound sales growth for leather manufacturer and processors stands at minus 11 per cent, having decreased over the period from minus six per cent between 1996/97-1997/98 to minus 15 per cent between 1997/98-1998/99.

However, some companies certainly managed to buck the trend by reporting exceptionally buoyant sales growth results, such as Eagle Ottawa Warrington Ltd with a result of 213 per cent and Milbury Corporation Ltd with 202 per cent

Report reveals how top ten largest companies (by sales turnover 1998/99) have performed


Company Name 1998/99 Sales £ millions Pre-tax profit margin % 1998/99 Compound sales growth% 1996/97 - 1998/99
The Hartstone group Plc 105.6 4.6 -26
Scottish tanning Industries 76.5 8.3 5
Pittards Plc 74.3 0.2 -17
Eagle Ottawa Warrington 49.4 1.3 213
Carlton International Group 43.3 2.6 5
Connolly Leather 29.0 -0.2 -4
Bradford hide Co 24.6 4.1 -16
Holmes Hall Tanners 22.6 -7.1 -15
Yarwood 22.0 1.5 4
Shilton Holdings 21.7 4.2 5
Overall Industry average -0.6 -11
( source: Business Ratio - Leather Manufacturers & Processors)


The report
The Business Ratio report, entitled "Leather Manufacturers & Processors" and published by The Prospect Shop, analyses and compares the financial performance of 60 leading companies operating as leather manufacturers and processors in Great Britain. Covering the last full three accounting years, (1996/97 to 1998/99) the report provides individual company analysis as well as performance averages for the industry as a whole.