TFC claimed that an increasing number of packagers are abandoning sub-prime and non-conforming business in preference for the prime market, in an attempt to grow their critical mass rapidly. While this may increase the volume of mortgage applications processed it is having a negative effect on their corporate profitability.
The claim has been made following research conducted by TFC into the financial performance of 117 packaging companies from information available at Companies House, the official government body that collates official financial data on limited companies.
The research found that while 70 per cent of companies recorded an increase in turnover during 2001, less than two out of 10 firms reported a trading profit.
"Our advice to packagers in the sub-prime and non-conforming market is to stick at what they know best and not be tempted to go for volume at the expense of profit. Such a move could seriously affect their financial health," said Tom Gurrie, national sales manager of TFC.
"According to our research, many companies are moving into markets where they experience the same heavy workloads, but get paid very different scales of professional fees. As a result, their financial performance deteriorates – yet it doesn’t have to be like this."
