Wholesale profit margins have slipped to wafer-thin levels over the past year and traders expect conditions to remain tough despite the UK's emergence from recession.
Wholesalers recorded average pre-tax profit margins of 1.16% in 2009, down from 1.27% in 2008, reveals The Grocer's Big 30 ranking of grocery wholesalers.
Although only three operators reported a decline in turnover, 12 of the 26 for which UK pre-tax profits were available reported a decline in profits.
The figures were skewed by the results of Palmer & Harvey, the UK's biggest wholesaler, which saw its pre-tax profits plummet because of a capital restructuring following its MBO, and those of Makro, which saw its pre-tax loss increase from £19.4m to £26.7m. Excluding P&H and Makro, average pre-tax profit increased from 1.81% to 1.85%.
Booker and Bestway were two of the biggest winners. Booker increased turnover by 3.3% to £3.2bn, and pre-tax profits by 30.4% to £47.2m. Net debt decreased 47% to £24.9m.
"Last year was better than most people reasonably expected, but 2010 will be very difficult," said CEO Charles Wilson. "Working cash becomes tighter as you come through this stage of the economic cycle and higher taxation following the general election could squeeze consumers' disposable income."
Bestway increased its wholesale turnover 5.2% to £1.9bn and increased pre-tax profits 16.8% to £39.9m.
MD Younus Sheikh said he expected 2010 to be "no better than 2009", although he hoped to buy a competitor and was interested in "anyone and anybody". "We hope we will grow through some organic growth and maybe some acquisitions," he said.
Foodservice giants 3663 First For Foodservice and Brakes were unable to provide UK profits figures.
Foodservice had a tough year, having been hit by falling volumes, increased costs and increased competition. Volumes fell 10.4% in the year to November 2009, while value sales fell 7.7%.
Wholesalers recorded average pre-tax profit margins of 1.16% in 2009, down from 1.27% in 2008, reveals The Grocer's Big 30 ranking of grocery wholesalers.
Although only three operators reported a decline in turnover, 12 of the 26 for which UK pre-tax profits were available reported a decline in profits.
The figures were skewed by the results of Palmer & Harvey, the UK's biggest wholesaler, which saw its pre-tax profits plummet because of a capital restructuring following its MBO, and those of Makro, which saw its pre-tax loss increase from £19.4m to £26.7m. Excluding P&H and Makro, average pre-tax profit increased from 1.81% to 1.85%.
Booker and Bestway were two of the biggest winners. Booker increased turnover by 3.3% to £3.2bn, and pre-tax profits by 30.4% to £47.2m. Net debt decreased 47% to £24.9m.
"Last year was better than most people reasonably expected, but 2010 will be very difficult," said CEO Charles Wilson. "Working cash becomes tighter as you come through this stage of the economic cycle and higher taxation following the general election could squeeze consumers' disposable income."
Bestway increased its wholesale turnover 5.2% to £1.9bn and increased pre-tax profits 16.8% to £39.9m.
MD Younus Sheikh said he expected 2010 to be "no better than 2009", although he hoped to buy a competitor and was interested in "anyone and anybody". "We hope we will grow through some organic growth and maybe some acquisitions," he said.
Foodservice giants 3663 First For Foodservice and Brakes were unable to provide UK profits figures.
Foodservice had a tough year, having been hit by falling volumes, increased costs and increased competition. Volumes fell 10.4% in the year to November 2009, while value sales fell 7.7%.
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