Sales fall in 60% of Cork firms

SIX in 10 Cork companies have seen sales fall in the first three months of the year, forcing one in two businesses to delay paying bills to conserve cash.

These are among the findings from the latest Cork Chamber economic trends survey, which confirms the SME sector is still

Cork Chamber senior vice-president, Ger O’Mahoney, said the survey, undertaken by more than 200 companies, comprising both SMEs and multinationals, confirms that the first three months of 2009 has been a particularly turbulent time for businesses in the Cork region.

“Business optimism has improved slightly since the previous survey carried out in January 2009, with 59% of companies more confident about the future of their business from a financial perspective, compared to 52% in the previous survey.

“However, decreases in company turnover have remained static since January, with 65% of companies recording a decrease in turnover of up to 20% in the last 12 months,” said Mr O’Mahoney, who is expected to be elected Chamber president at its AGM tonight.

The Deloitte accountant said the survey shows credit restrictions remain a significant problem for more than 60% of companies, with bank overdrafts and bank loans branded as the major cause.

“This has resulted in an increased focus by companies on maximising their working capital and has resulted in 47% of companies taking longer to pay their creditors, compared to 42% in the previous survey. This only exacerbates the already very serious situation and highlights the urgent need for access to capital to be improved dramatically,” said Mr O’Mahoney.

The chairman of Cork Chamber’s Fiscal Services Working Group, Maurice Minogue, said generating business was highlighted as the single biggest challenge facing companies.

“Due to the lack of demand for goods and services, exacerbated by the Government’s decision to increase taxation in the supplementary budget, there is a burning requirement for government intervention in order to protect jobs and enhance future jobs. The Chamber strongly recommends a correction to the increase in the top VAT rate and, in particular, we would recommend that the VAT rate is cut to bring it closer to that of the UK. Cuts in employer PRSI also need to be introduced,” he said.

Mr O’Mahoney disclosed that respondents to the Chamber survey indicated that public sector reform should be the top priority of Government, in terms of advocating an improvement in efficiency across all sectors.