UK transport sector profits up, confidence down

This quarter, confidence among businesses in the transport & storage sector has fallen to the lowest level seen this year, alongside weakened levels of confidence across the whole UK.

However, the sector expects to see improvements in turnover, gross profits and sales in 2011, according to the latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM).

According to BCM, which tracks the confidence levels of UK finance and business professionals, the Confidence Index of businesses in the transport & storage sector has fallen by more than 20 points to stand at 7.6 points in Q4 2010, from the considerably more buoyant 29 points seen in Q3.

Across the UK, confidence fell by nearly 10 points, from 21.5 to 11.9 points.

The gloomy outlook may be attributed to a number of factors, including worries that the levels of freight and storage will be affected by weakened expectations for growth over the coming year, and caution among investors.

The ongoing uncertainty over the UK economy over the next twelve months following the government’s austerity measures may be another reason behind the decline. Similarly, fears that unemployment and reduced public sector spending will negatively impact the level of travel and commuting may also have fed through.

Despite the decline in confidence, businesses in the sector saw some improvements in their business performance. Turnover grew by 2.8% over the last twelve months, and is expected to increase by another 3.2% over the next year.

Gross profits increased by 1.9% over the last twelve months, with growth of 2.7% expected over the next twelve months.

Similarly, sales were up 2.6%, with a 3.1% increase expected over the coming year.

Will Mc Williams, Head of Transport at Grant Thornton, says: "Pessimism in the transport & storage sector is broadly in line with weakened expectations for 2011 across the whole economy, in part on the back of expectations of reduced consumer spending.  However, transport businesses are still predicting that sales, turnover and profits will be higher over the next four quarters than in 2010 overall."

He added that transport & storage businesses are quite used to dealing with difficult conditions, and will continue to review their own prospects in terms of financing, order books and opportunities.