One in five UK timber companies are failing, according to a survey of 1,212 firms operating in the sector.

Plimsoll Publishing Ltd’s report classes 261 businesses as in “danger”, due to a combination of high debts and low margins. A further 205 are placed in the “caution” category.

Some 465 companies have a “strong” rating, delivering margins averaging 8%, largely debt-free.

David Pattison, Plimsoll senior analyst, said: “If the pundits are right and the UK market tightens towards the end of the year, then there is no doubt in my mind that the 261 companies already in the danger section of the analysis will take the brunt of this downturn.”

He said nine previously failed timber products businesses were rated in the caution or danger categories up to two years prior to their demise.