Weak pound sees 13% drop in SME margins

26 July 2017

Importing SMEs are reporting falling margins as a result of the weaker pound, according to a survey.

The poll by American Express found 81% of importers reported their business was suffering in current conditions, with margins falling by an average of 13%.

In response 61% have raised prices, with an average hike of 9%, while a third are planning price increases over the next year.

The survey, conducted in partnership with East & Partners, canvassed 2,219 businesses that trade internationally, with turnover between £1m and £100m. Among respondents 474 imported only, 363 exported only and 1,382 did both.

However, nine in 10 SME exporters were benefiting from the fall in sterling and said it was increasing margins.

Respondents reported an average margin increase of 16%, while 95% of those currently exporting planned to take advantage of the conditions and boost exports further over the next 12 months.

Surprisingly, companies that both import and export were the most positive of all when asked about current conditions. Almost all (95%) of respondents in this category said the fall in sterling has had a positive impact on their business, with an equal number reporting increasing margins.

Yet many respondents still had concerns about fluctuating rates, and not only importers. Some 27% of businesses said currency volatility represented a risk to the future of their business.

A quarter (26%) reported they were unable to predict what they will earn from a 30-day invoice due to rapidly fluctuating exchange rates.

Jose Carvalho, senior vice president, global commercial payments Europe at American Express, said: “Exchange rates have a huge impact on UK SMEs with an international footprint, and on their ability to maintain their place in the local and global economies.”

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