Flat or Falling Profits : Businesses Report Slowing Trend
A survey of San Fernando Valley businesses released last week found more companies reporting flat or declining profits for the third quarter of 1985 than did for the second quarter.
The survey found that 23% of the businesses posted lower profits in the third quarter than in the previous three months, and 34% reported flat profits. In the second quarter, 20% of the businesses reported lower profits than in the previous quarter and 25% showed flat profits. Of those surveyed, 42% had higher earnings in the third quarter, versus 54% in the second quarter.
The results are from the 11th quarterly survey of Valley businesses conducted by the Woodland Hills office of the Price Waterhouse accounting firm. The firm said that it polled 490 companies, including both clients and non-clients, and that 23% responded.
‘Cool’ Economy
Wilfred J. Bagg, a senior Price Waterhouse manager, said the third-quarter results clearly show a slowing of the business pace.
“There’s no doubt about it, the economy’s cooled off,” he said.
Sales results were off. About 29% of the businesses reported lower sales in the third quarter, versus 15% in the second quarter. Only 47% reported higher sales, versus 58% in the second quarter; 24% said third-quarter sales were flat, versus 27% in the second quarter.
Continuing Caution
The survey seemed to reflect continuing caution on the part of respondents. Asked whether they would be expanding their work force, 62% predicted no change, 8% planned cutbacks and 29% said they planned new hiring. Those results are almost identical to the second-quarter findings.
“You’re really not seeing overall growth in the marketplace, except for non-technical companies,” said Don Rudkin, partner-in-charge of the Woodland Hills office of the Deloitte Haskins & Sells accounting firm.
The survey showed largely flat capital spending, as it did for the second quarter. It also found that prices were stable, with 68% of the businesses reporting no change in what they charged for their products during the quarter, and 11% having cut prices. Only 18% raised prices.
