Currency dilemmas 

UK companies are adapting to sterling’s decline

UK companies are adapting to sterling’s decline

UK companies are adapting to sterling’s decline

‘The falling value of the pound to the dollar has proved very significant for us,’ says Paul Luen, managing director of Yorkshire-based Martek Marine, a manufacturer of environmental safety equipment for the shipping industry.

It’s allowed Martek to accelerate exports to Europe and beyond, notably the Far East. He explains: ‘It’s steered me toward pricing in the eurozone in euros where previously we were pricing in pounds.

‘So we can keep the same price in the eyes of the customer but increase the margins. It’s working very strongly in our favour at the moment.’

On the import side, it’s a different story. Russell Lister, after sales manager at Grimme UK, which specialises in technology and equipment for potato harvesters, says the rising euro and falling pound are squeezing the business: ‘We have had to increase the prices of machinery and spare parts.

‘That said, last year was good for us and this year will be good too. It hasn’t hit us properly yet.’

For Luen, the market conditions are ideal for expansion. He claims currency rates are leading to an additional ten per cent margin on actual sale price.

‘In some cases, it can be as much as a 40 per cent enhancement on the gross margin of the deal.’

If there is a downside, Luen says it’s that some goods need to be purchased in dollars. ‘There is a balancing effect,’ he admits.

‘The perfect scenario would be a total cancelling out between the dollar receipt with my dollar expenditure. That would remove any risk whatsoever, but that’s not the case.’

Lesley Batchelor, chair of the Institute of Export, strikes a pragmatic note regarding how businesses can benefit from the present currency valuations. ‘The pound falling is good as far as exports is concerned, but we’ve also got a heavy price on fuel which internationally is always charged in dollars, and rising food costs.

‘It’s just dire everywhere, so even if the pound isn’t quite so strong against the dollar, it does mean you have to rely on people in that marketplace being able to afford to buy your product anyway.’

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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