Small transport and storage businesses toughing it out

Sensis report says small to medium businesses struggling with profitability

Small transport and storage businesses toughing it out
Sensis detects below-average confidence amongst T&L SMBs


Small to medium businesses (SMB) in the ‘transport and storage’ sector report finding business conditions challenging but are facing up to them with a limited store of confidence, according to a Sensis survey.

In releasing the December Quarter 2018 Sensis Business Index, the business services firm notes SMBs generally are bullish, with confidence across the country reaching a nine-year high.

The report, which measures SMB activity, expectations and confidence over a three-month period, found confidence levels rose eight points to +50, the highest level recorded since December 2009, with Victoria claiming the top spot, due to a post-election surge to +55, which is 14 points higher than the September quarter report.

But compared with the December 2017 survey, when they slipped ahead of the general consensus, ‘transport and storage’ operators offer a more conservative, if still positive, appraisal for the latest report.

"Confidence lifted slightly but remained below the national average. Key indicator results last quarter were modest at best, tempering expectations; however, they are positive for 2019," the Sensis analysts state.

"Confidence in this sector increased two points generating a net balance of +41.

"This is nine points under the average. The main driver of confidence is being an established, solid business followed by healthy sales and specific business strengths.

"Falling sales created the greatest concern."

This sector recorded below average balances for prices (+4), profitability (-14), and employment (-6).

A positive balance was observed for sales (+4) and wages (+10). The capital expenditure balance was negative but the third highest recorded by sector (-1).

Expectations this quarter are below average for sales (-3), profitability (+5) and wages (+4). The balance for prices (+15) was above the average while employment (+6) was at the average.

Expectations for the year ahead are below average for each key indicator – prices (+22), sales (+18), wages (+17), profitability (+7), employment (+5) and capital expenditure (-6).

Business confidence high in early 2017

Metropolitan SMBs were once again found to be more confident than their regional counterparts, recording balances of +58 and +38 respectively. Overall, prospects for the year ahead were also strong particularly in sales, with over 40 per cent of SMBs expecting growth in this area to indicate a rewarding 2019 ahead.

"It’s great to see over 64 per cent of small and medium business owners report they feel confident in their business prospects, particularly as the survey was completed as they headed into the Christmas period," Sensis CEO John Allan says.

"The report also shows that expectations for 2019 were positive across the majority of business indicators, which is extremely encouraging given the disruption of the coming Federal Election."

At an industry level, ‘hospitality’ was found to be the most confident sector, recording a massive increase of 36 points to a record high index of +71.

And while ‘retail’ remained the least confident at +26, it recorded an increase of 14 points which indicates the sector maintained positivity ahead of its busiest period.

Regarding views of the federal government, "SMBs made it clear they don’t feel their business is affected by decisions made in Parliament, with 62 per cent reporting federal policies had no impact on their business – increasing from 57 per cent in the previous quarter".

"The perception that federal government policies do not affect small and medium businesses has grown in popularity over the years among SMBs, which could suggest they are becoming increasingly resilient toward government changes ," Allan says

Despite a growth in sales predictions, perceptions of the economy continued to fall for the third quarter in succession, with 61 per cent feeling they will see no change in the economy in 12-months’ time.

"It is interesting to highlight that SMBs are more confident in their own sales over the next 12-months than they are in the Australian economy and we hope to see businesses maintain this confidence throughout 2019," Allan says.

Among other findings:

  • access to finance continues to decrease, falling four points to -21; the lowest recorded balance since 2013. SMBs are also reporting that time to pay is pushing out and is becoming an issue
  • capital expenditure trends fell again to -8 despite confidence being high
  • higher wages were recorded by 21 per cent of SMBs with a fall reported by 12 per cent. The net balance of +9 is three points lower than last quarter but the same as recorded this time last year
  • profitability performance has remained negative since March 2015, recording a balance of -1. However, expectations of the next 12-months have increased – with 40 per cent believing profitability will increase during 2019.


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