With fears of the credit crunch affecting markets even as seemingly solid as the UK security market, Plimsoll decided to see if the rumours bear any truth and how bad the situation really is.
At a time when even the most ambivalent are starting accept that a recession will hit the UK economy in 2008. A new study by industry analysts Plimsoll Publishing has looked at how the UK slow down is already impacting on Security market.
The analysis, published on May 1, has drawn on the very latest figures for each of the UKโs Top 1500 companies in the security market.
Almost a third of companies are already showing signs of recessionary behaviour, reporting declining sales. This is immediate evidence that the market is slowing down.
Over half of companies have seen their margins fall. Of most concern, over a quarter of these are currently running at a loss. The pressure on sales has forced an immediate squeeze on profitability. These companies are struggling against rising costs and declining sales.
Almost a third have seen an increase in their need for short term finance, a 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 companies in an even more vulnerable position.
As a result, as many as one in eight security companies could disappear completely if this trend continues or deepens.
Explaining results
David Pattison, senior analyst at Plimsoll, says: โWe are reading every day how the credit market and the world of finance is been hit, but nonetheless I was still surprised to see just how much the security market is feeling the pressure. I hope this report is recognised as an early warning sign and managers read this and use the findings to steer a course though these tricky times.โ
The analysis, is not entirely without some good news, some evidence that certain areas, particularly the small companies, with their concentration on local and domestic markets are less exposed to less exposure to the slow down in the market.
This report names the 1500 companies that are best placed to gain in a recession and those likely to fail because of their current strategy is unsustainable. Copies are available for £350 by calling 01642 626422 or by email at c.sherwood@plimsoll.co.uk – readers can request a £50 discount when ordering by quoting this magazine.
