Piggy Bank

Piggy Bank

Consultancy Plimsoll Publishing has said an unusual alignment of factors (rather than stars), set against the backdrop of continuing economic weakness, means a wave of consolidation is about to break across the bow of the road transport industry.

"The road haulage industry should brace itself for takeovers as a series of curious circumstances begin to shape the industry," according to Plimsoll's latest analysis of the sector.

Why? Well Plimsoll says a combination of stock piling cash (by some), difficult growth, low interest rates and ageing directors (looking to exit via a sale) has left around 75 companies ripe for acquisition ahead of (here's hoping) the return of growth for the sector in the future.

David Pattison, senior analyst on project, said: “On one hand, 71 cash rich companies have been stockpiling cash and their problem is that the built up cash could give them a real headache.

Low interest rates mean this cash will be sitting idle on the balance sheet and not generating a return. It really needs to be put to good use and an acquisition seems an obvious option.”

“Then on other hand, 75 businesses in the road haulage market are showing classic acquisition criteria. They are all declining in financial strength, many have an aging board and are still privately owned.

Plimsoll's analysis (of the top 1,000 companies in road haulage) found:

Almost a third of directors (31%) will be over 60 by the end of the year.

•  71 companies within UK road transport have over £5m of cash on their balance sheet.

•  299 firms are still operating as independents

•  37% of organisations did not increase sales

•  One in 4 companies are running at a loss