Profit margins have inched back up, but are still below precessionary levels
New York, NY (PRWEB) November 23, 2014
Revenue for the Horse and Other Equine Production industry was on an upward trend until the recession severely weakened demand for horses. Downstream demand for the industry's horses is mainly dependent on household disposable income, activity in the horse racing industry and the popularity of horses for recreation. Due to the onset of the recession in 2009, demand fell, causing revenue to plummet that year and in several subsequent years. The industry is not expected to recover to prerecessionary levels; revenue is anticipated to fall in the five years to 2014. The decline is mainly attributed to the drop in big-ticket purchases during the recession, but the industry has also been negatively affected by less participation overall in horse-racing activities. Renewed demand is expected to lead to revenue growth in 2014.
The recession also negatively impacted profit margins. As fewer people had the disposable income for purchases of new horses, breeders had to drop their prices to accommodate the buying market. Many did not make up the costs that went into producing these horses, and the industry recorded comparably low margins throughout the past five years. Profit margins have inched back up, but are still below precessionary levels. IBISWorld Economic Analyst Antal Neville says in the updated report “as a number of breeding facilities failed to make ends meet, many left the industry, spreading out the inventory of horses and other equines to specialized breeding facilities as well as to generic boarding facilities.” Therefore, participation in the industry has grown in the past five years.
The Horse and Other Equine Production industry is forecast to grow slowly but consistently in the next five years due to further recovery in consumers' disposable income, which will prompt increased demand for these discretionary purchases. Similarly, consumers with more spending money will attend or take part in horse racing related activities, such as gambling. “These factors will enable racing facilities to generate more revenue and, therefore, offer larger amounts of prize money to incentivize racers to participate,” Neville says in the updated report. Racers will then demand more Thoroughbreds, which are known for their high quality performance. Additionally, increased exports will facilitate revenue growth. As a result, revenue is forecast to rise in the five years to 2019.
For more information, visit IBISWorld’s Horse and Other Equine Production in the US industry report page.
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IBISWorld industry Report Key Topics
Establishments in the Horse & Other Equine Production industry breed and raise horses, mules, donkeys and other equines (mammals belonging to the Equidae family) for transportation, racing events, rodeo competitions and other recreational sports. These establishments are commonly referred to as ranches, farms or studs.
Key External Drivers
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Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
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