Private Companies Growing Sales and Profit Margins

U.S. businesses have been growing their sales and expanding their profit margins at a healthy and consistent pace over the past year, according to the latest quarterly analysis of private-company financial statements by Sageworks,

Strength in construction has contributed to overall private-company results, but a few key sectors, such as the manufacturing and transportation industries, are seeing slower growth than previous periods, Sageworks noted. Sales for private companies on average are increasing at an annual rate of 8 percent as of June. The average privately held company is also making more than 7 cents of profit for each dollar in sales (a 7.2 percent net profit margin). 

Despite warning signs from the Census Bureau that the post-2009 housing boom and recovery may be slowing, privately held construction companies continue to grow sales at a double digit pace, increasing their rate of growth in the most recent period. Net margins for these companies continue to increase, currently reaching a five year high of 5.1 percent.

The manufacturing sector, which was badly damaged by the recession, has recovered significantly over the past five years.  According to figures from the White House, output for manufacturing companies has climbed 30 percent since the end of the recession.  Privately held manufacturing companies in particular have recovered with a great deal of strength since the recession: Two years ago, these companies were outpacing the robust private-company average sales growth rate of nearly 10 percent by growing sales at a rate of 14 percent. Two years later, they’re growing sales at a rate half that size.

“Hopefully, the slowdown in sales we’re seeing for manufacturing is a minor blip and not an indication of broader softness in the economy.” said Sageworks chairman Brian Hamilton in a statement.

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