Belfast Telegraph

Wednesday 16 April 2014

Survey shows firms’ lack of optimism over profits

Northern Ireland companies expect the economy to grow in the next few years but are less upbeat about their own profits in the short-term, a survey by cross-border body InterTrade Ireland found.

For its quarterly business monitor survey, it asked 500 Northern Ireland businesses across all sectors about their recent experience of trading and their expectations for the immediate future.

Labour costs and energy costs were the two biggest challenges for companies trying to maintain competitiveness.

Only 16% had recorded a profit in the last three months of 2009, with earnings taking a tumble in around half of manufacturing businesses, half of construction businesses and 45% of businesses in the leisure, hotels and catering sector.

Just 28% of all businesses expected their profits to go up, compared to one third in the third quarter of 2009.

Eoin Magennis, policy research manager at InterTradeIreland, said its previous surveys had shown southern companies to be more pessimistic about the future than their northern counterparts.

However, the recent fall in profit-related optimism north of the border was narrowing the gap.

“In the south the recession came sharper and faster. But while there is now a feeling in the south that the worst is over, there is still uncertainty in the north.

“There is an election ahead, the risk of public sector cuts — and many businesses in the north are tied to public sector contracts.”

Nonetheless, over three in five of businesses said they expected the Northern Ireland economy to grow in the next three years — close to double a previous estimate of 34%.

But four out of five businesses said the economic downturn had harmed their business.

One quarter of businesses said the impact had been severe. But the scale of the impact was the same whether a business was small, medium or large.

Over a third of businesses had made cuts on internal marketing and advertising.

The same number had cut salaries, with one in five reducing working hours and unpaid leave.

The average level of wage cutback was 15%, and just over 30% said they would be trying again this year to reduce salary |overheads.

Two in five companies were trading across the border, with cross-border trade making up just less than 20% of their turnover.

Just under a quarter had cut their prices — but in a sign that price-cutting could be on its way out, only 7% planned to cut prices again within the next six months.