At a time when even the most ambivalent commentators are starting to accept the fact that a recession (of whatever magnitude) is likely to hit the UK economy this year, a new study commissioned by industry analyst Plimsoll Publishing has revealed how the financial slowdown is already having a significant impact on the security guarding sector.
The study draws on the latest commercial figures produced for each of the UK’s Top 270 contractors, and the headline findings make for pretty stark reading.
Over a quarter of companies are beginning to exhibit signs of recessionary behaviour, reporting a decline in sales. This offers immediate evidence that the market is slowing down. In addition, over half of the contractors surveyed have witnessed their margins falling in what is already a low margin business. Of most concern is the fact that a quarter of these companies are presently running at a loss.
Apparently, the increasing pressure on sales has forced an immediate squeeze on profitability, with contractors struggling in the face of rising costs and worsening sales.
Need for short-term financing
Almost one third of the security firms listed in the Top 270 ‘League Table’ have also seen an increase in their need for short-term finance, a sure sign that costs are running ahead of cash flow. This is doubly dangerous at a time when banks and financiers are looking hard at their loan books (and, therefore, places these security companies in an even more vulnerable position).
As a direct result, as many as one in every nine companies could disappear from the market altogether if this trend continues, or indeed deepens still further.
Expanding on the survey results, David Pattison (senior analyst at Plimsoll Publishing) told info4security.com: “We are reading every day how the credit market and the world of finance is being hit, but nonetheless I was still pretty surprised to see just how much the security guarding sector is feeling the pressure. I hope this report is recognised for what it is – an early warning sign. Managers should read it and use the findings to steer a course through these tricky economic times.”
Thankful, Plimsoll’s analysis is not entirely devoid of good news. There is evidence to suggest that smaller contractors, with their concentration on local and domestic markets, are less exposed to the slowdown.
For a copy of the full report call Plimsoll Publishing direct on 01642 626422
