30 Mar 2012

SMEs profits hit by rising costs - study

3:56 pm on 30 March 2012

The country's small- and-medium-sized firms (SMEs) have been experiencing smaller profits thanks to rising costs.

A study by accounting company Grant Thornton found revenue in the SME sector grew about 7% in 2011, but costs rose by 12%, pushing down profits.

The consultancy firm says companies have been lowering prices to attract consumers, which is squeezing margins, particularly among retailers.

It says profit fell by three-quarters for that group, while revenue and costs rose by roughly a tenth.

Despite lower profits, Grant Thornton says most firms remain profitable, which it says is a good sign and a reason to for hope in 2012.