Profits static as half of firms raise prices

MORE than half of businesses have cut their prices in the last six months but figures show this has done little to improve profitability.

This is according to the latest InterTradeIreland business survey, which also found that almost half of all companies believe labour costs are still a key concern for them.

One of the main problems for businesses has been the increased demand from a third of customers who have requested longer payment terms. Encouraging bank lending was also cited by one in five companies as something that the Government could do to help them.

The survey of 1,000 businesses from both sides of the border show that firms are still focussing on measures to improve their cost base and ensure competitiveness.

Just over half of businesses recorded a fall in profitability between January and March this year, with the same number reporting a drop-off in turnover.

InterTradeIreland strategy and policy director Aidan Gough said: “This quarter’s results show that recovery is precarious and will need nurturing by both governments. There are still significant concerns about the prospects for the economy amongst businesses and the numbers experiencing severe impacts from the downturn remain high. The survey presents a picture of difficult trading conditions for businesses. Businesses have taken significant steps to restructure. Undoubtedly, closures and cost reductions have been the difficult side of this for employers and employees alike.

“However, businesses are also looking to the future. Innovation and diversification into new markets has been identified by companies as important to their future success. Supporting firms in these efforts will continue to be a key part of Government policy and the work of InterTradeIreland.”