12.17.2008 10:45 AM
IABM Report Reveals Stalling Growth
After an extended period of strong sales growth and profit performance the IABM Industry Index — which tracks year on year change in sales and profitability — has revealed the first indication of a downturn in the broadcast and media technology sector.

Companies analysed in this report have sales turnover in the last 12 months of over US $10.3 billion. Global sales have increased by 11.9 percent year on year; however, this rate of increase now appears to have peaked. According to the report 74 percent of companies are in profit in the latest results, but the number moving into loss is increasing and the aggregate profit to sales ratio stands at 11.7 percent and is declining.

Commenting on the report's findings, Roger Stanwell, IABM Chief Executive Officer, said: "The cyclical peak rate of sales growth seen in both October 2006 and October 2007 has hardly happened at all this year. There is now an indication of the start of a decline in the long term value of this Index, for both North American and European companies."

Although profitability has still improved, it is only by a rate of 9.3 percent year on year; the lowest increase since the Index tracking started three years ago. Profit growth in Europe has in fact turned negative — a 1 percent decline on the previous 12 month period the report revealed.

Furthermore, confidence amongst senior executives in the supply side of the broadcast and media technology sector has declined markedly according to the IABM Industry Trends Survey. The survey, undertaken in conjunction with Ernst & Young polled the views of some 80 senior executives in IABM member companies around the world.

Confidence has gone from positive to negative for the first time since the survey started in 2005 and 43 percent of respondents expect the situation to be deteriorating in a year from now compared to 13 percent who think it will be improving.

Order volumes and values have weakened over the last quarter and although selling prices were stable in Q3 2008, cost prices have continued to show upward movement resulting in squeezed margins. This is predicted to continue. The political/economic situation and project/order deferral by customers are cited by 57 percent of respondents as limiting factors on order growth.

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