NI Business Recovery Survey Shows Significant Concern
A new survey conducted by Duff & Phelps, in partnership with Trade NI, shows that over one third (35%) of businesses across the retail, hospitality and manufacturing sectors in Northern Ireland believe that their trading and profitability levels will not return to pre-COVID-19 levels ‘until 2022 or beyond.’
The survey included members of Retail NI, Manufacturing NI and Hospitality Ulster and was conducted in September 2020, prior to the latest COVID-19 restrictions being imposed across the province. Over 50% of respondents indicated they are ‘concerned’ or ‘very concerned’ about their performance in the year ahead, with a further 29% saying they are ‘uncertain’.
When asked by how much their employee headcount will change by this time next year, one quarter (25%) of businesses predicted that it would be ‘up to 25% lower’, with 17% saying ‘up to 50% lower’ and 6% saying ‘more than 50%’ lower. Only 9% of respondents said their headcount would be higher, with 44% saying it would be ‘similar’.
Just 12% of respondents predicted that their turnover would be higher this time next year, meanwhile, almost one quarter (23%) estimated that it would remain ‘similar’. Of those suggesting that their turnover would reduce over the coming year, 26% said it would be ‘up to 25% lower’, whilst 25% said it would be ‘up to 50%’ lower and 12% claimed it would be ‘more than 50% lower’.
“It is clear that significant challenges will lie ahead for these businesses across what are among the sectors worst-hit by the coronavirus pandemic,” comments Davy Elliott from Duff & Phelps. “Whilst these results are concerning, it is encouraging to note that respondents are proactively taking steps to protect their businesses and boost recovery efforts in the coming year and beyond.”
While 40% of respondents said they will consider restructuring their business in the next 12 months, 27% said they intend on repurposing or diversifying their product line. Sixteen percent (16%) will endeavour to renegotiate their existing lease terms, while 15% will seek to refinance their business.
“We have been involved in a number of restructuring cases where we’ve completed an independent review of the value of a business and its assets. This has helped guide stakeholder assessment and decision making, particularly where multiple parties are involved, and brought the requisite level of independence and integrity to the process,” Elliott added.
The survey respondents also identified a range of support initiatives they will rely on to help their businesses recover from COVID-19 in the coming year. Over two-thirds (69%) of businesses will call upon government grants or loans, with 51% also relying on employee retention support. Two-fifths (41%) will seek to defer HMRC payments, while one quarter (26%) will seek new or additional bank lending and 37% will focus on marketing and promotional development activity.
When asked to share their thoughts, the Chief Executives of Trade NI. Glyn Roberts, Stephen Kelly and Colin Neill said: “What comes across very clear from the survey of our respective memberships is the vital importance of the rates holiday and the need to extend it further from April 2021. If our economy is to stand any chance of recovery, further rates relief will be needed throughout next year to support our members as we rebuild our shattered economy.”
There are steps that businesses across the retail, hospitality and manufacturing sectors can take in the coming months. Anne O’Dwyer, Managing Director and Co-Head of Duff & Phelps adds: “Whilst it is challenging to accurately forecast trade over the short to medium term given the current flux in the market, having a clear picture of expected cash flows is essential.”
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“Trading projections can be flexed as the environment changes but highlighting potential funding gaps or cash constraints will assist businesses as they look to negotiate with stakeholders or apply for additional funding supports,” she said.