From today's Fin Review
Three reasons to ignore the reporting season hypeThe other C crimping margins is competition, which appears to be rising across many sectors for a range of reasons.
Retail is belted by both online competition and, in the case of some sectors (such as supermarkets), new entrants.
This is being passed down the line – take the example of consumer products business Pental, which makes soap and distributes other products, and reported spending on price cuts and rebates to retailers soared 64 per cent during the period.
Companies in the construction and infrastructure sectors are suffering similarly.
Engineering appears so competitive right now that Lendlease wants out, and RCR Tomlinson has already exited the backdoor.
Waste management firm Bingo and Seven Group Holdings subsidiary Coates Hire both reported a sharp increase in competition. IOOF and other wealth providers suffered shrinking margins as they reacted to competitors that had dropped their prices.
The flip side to both these competition and costs is that companies that have pricing power and can maintain and increase their margins should be prized.
CSL, Treasury Wine Estates, outdoor advertising group QMS and online classifieds firms Seek, Domain, REA Group and Carsales were all examples of businesses who pulled this up.
