Design profits climb to three-year peak

By Clare Dowdy

Design consultancies are reporting their highest profits in the past three years, reflecting the feel- good factor recently experienced by the industry, according to accountant Willott Kingston Smith’s latest industry survey.

“The feeling is that there is more work out there,” says WKS partner Mandy Merron, “and this is the first time it has come through in the figures.”

The accountant’s quarterly survey of the UK’s 20 biggest design groups shows that operating profit per head has almost recovered to its 1985 level.

A reduction in overheads and greater efficiency have contributed to consultancies’ increased profits, says Merron: “A couple of years ago they took all the tough decisions and this is the first period in which they have got rid of their overheads.

“They have also become more efficient at generating profits out of income being earned,” she adds.

Although anecdotal evidence suggests that consultancies will continue to report healthy profits, “it seems unlikely that the market will return to the heady days of the mid-Eighties”, the survey says.

This is partly because client spending is still 20 per cent less than it was in 1992. As a result, a lot of designers are now working in Europe, Merron says.

WKS’s annual industry survey is due out later this month.

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