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Survey: 'growth' companies withstood recession.

Unlike most business, a substantial number of America's fastest growth companies were able to bypass the recession, surveyed experienced no slowdown in profit growth as a result of the recession, according to Coopers & Lybrand's latest "Trendsetter Barometer. These high flyers tend to be companies in specialized industry niches, or ones offering unique products or services, the survey reveals.

However, nearly six in 10 growth companies surveyed experienced a slowdown in profit growth due to the recession, according to "Trendsetter Barometer." This slowdown cut across nearly all industry sectors and size categories. According to the survey, 25 percent reported a "significant" slowdown in profit growth and 34 percent reported "somewhat" slowed profit growth.

"Many of the growth companies that resisted the recession's drag on profit growth benefitted either from a rising tide in their industry segment, a unique product or service, or an absence of major competitors," explained Tom Basilo, a partner with Coopers & Lybrand's Emerging Business Services group. "For example, companies involved with outpatient medical services; toys, games and hobbies; and training and education reported increased profit growth during these difficult times."

Product-based companies fared worst in the recession, with nearly two-thirds (64 percent) reporting a slowdown in expected profit growth, compared to 56 percent of service companies and 52 percent of trade/distribution companies, the survey found.

Smaller companies also experienced more negative effects, "Trendsetter Barometer" reveals. Nearly two in three (65 percent) growth company CEOs with fewer than 50 employees reported recession-dampened profit growth. In contrast, 57 percent of medium-sized firms -- those with 50 to 99 employees -- reported reduced profit growth from the recession, but only half of those firms with 100 or more employees were similarly impacted, according to the survey. Very large growth firms, with 250 employees or more, were best able to avoid the recession's impact: only 43 percent had reduced profit growth.

Firms with lower profit growth during the recession expect to experience a slower rate of sales growth in 1992, a disturbing carryover effect, "Trendsetter Barometer" reveals. Companies with reduced profit growth during the recession now anticipate 22 percent topline growth, compared with the 34 percent expected by those companies whose growth in profits survived the recession intact.

"Companies with lower growth in profits were unable to invest as heavily in further expansion, and were often] limited in their external financing options," Basilo explained. "While these companies' track record still suggests a bright future, their CEOs will always speculate about what might have been."
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Title Annotation:Coopers and Lybrand survey, 'Trendsetter Barometer'
Publication:Real Estate Weekly
Date:Jul 8, 1992
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