UK laboratory equipment market 'healthier'

By Dr Matt Wilkinson

- Last updated on GMT

Related tags Investment

The UK laboratory equipment market is a healthier place to invest
than six months ago with companies increasing their returns on
investments.

According to a new report published by Plimsoll Publishing, the UK's laboratory equipment market is in good shape and while the market size has not grown in the last six months, companies are looking in better shape than at the turn of the year.

The report, entitled 'The UK Scientific and Laboratory Equipment Industry' , lists Applied Biosystems, Crystalox, Diploma, E2V Technologies and Spectris as some of the best trading partners in the industry.

According to David Pattison, author of the report, the best trading partners managed to successfully balance commercial growth and financial performance.

"We look at their business on two crucial criteria areas: the company's sales growth - a measure of their commercial success and their ability to drive their business on; and their financial strength - are they compromising their financial strength to drive that growth," said Pattison.

"262 of the 327 companies that we rate as strong are arguably ones you want to be doing business with and riding on their coat-tails."

According to the report, the outlook for the industry is the same as forecast at the end of the last year, with the market size still estimated be worth around £5bn.

This is consistent with the average sales growth remaining steady at around 5.7 per cent, with larger companies pushing their growth faster than smaller companies.

Interestingly, the average sales growth for small companies (revenues less than £0.7m) are managing growth rates of around 2.3 per cent compared with -0.1 per cent six months ago.

The stagnation in the sales return on assets and growth earnings seems to indicate the industry is going through a tranquil phase, and Pattison believes that this is because any pick-up in sales in one segment has been in line with cut backs from other segments.

Pre-tax profits were up a little from 3.9 per cent to 4.6 per cent and while this figure may not be significant to a business manager, Pattison believes this can be significant in terms of a total profit figure for the sector.

"The increase in pre-tax profits, pre-tax profits on investments and increasing directors fees may suggest the market has a little more life in it," he continued.

39 per cent of companies are now achieving 10 per cent pre tax profit returns on investment.

With the increased number of companies delivering this, the industry is looking like a safer place to invest.

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