As the UK’s security guarding sector began to emerge from the depths of recession in 2010, a somewhat fragmented industry appeared from the chaos.
According to new research just concluded by industry analyst Plimsoll, the market is now polarised between those companies who are ‘getting it right’ and those struggling to recover.
David Pattison – senior analyst and author of the 2011 Plimsoll Analysis entitled ‘Manned Security’ – explained: “Now that the storm is lifting we have been able to assess the damage left behind. 60 companies are in a parlous state, and starting the New Year clinging on for dear life. We have rated them as being in ‘Danger’.”
According to Pattison, falling demand was the final nail in the coffin for many. “The mistake they made, though,” he stressed, “was to not make those painful cuts early enough to protect their business.”
121 companies rated as ‘Strong’
However, the green shoots are now well entrenched with the number of companies rated by Plimsoll as ‘Strong’ rising to 121.
Pattison commented: “We rated these companies as ‘Strong’ in our latest report, and I have to congratulate them. In fact, many of them retained a ‘Strong’ rating throughout the recession. They’ve managed to be commercially successful without jeopardising their financial stability. While others fail around them, they’re in pole position to capitalise in 2011.”
When pressed on what these contrasting fortunes mean for the UK security guarding sector, Pattison put forward several points.
“Returning to growth will be paramount this year as costs and overheads continue to increase,” he suggested. “Without any growth, companies will have to reduce their overheads quite dramatically. Companies need to look to beat the current average profit margin of 2% if they’re to cover costs and invest in other growth areas.”
Identifying growth areas will be vital
Identifying these growth areas will be vital as the market grows slowly. “A group of 72 companies are leading the way, with growth of over 10%. With bank funding still scarce, fast-growing companies will have the resources and business models in place to further exploit exciting new opportunities.”
The 60 companies rated by Plimsoll to be in ‘Danger’ will be increasingly squeezed out of the market as they’re simply not competitive in the current economic environment. “Even their attractiveness as an acquisition is diminishing as new growth areas look more exciting,” outlined Pattison.
According to Plimsoll, we should watch out for a wave of corporate failures among these companies in 2011.
“Mergers and acquisitions will continue, but the profile of companies involved will shift. There will still be distress sales this year as companies buy struggling competitors on the cheap. However, there will be a return of more strategic acquisitions as larger companies look to buy into growth areas in the market.”
Guarding companies in distress
The Plimsoll Analysis has named 32 distressed companies that could be bought for a discount, and a further 31 fast-growing companies that are sure to attract the attention of the larger players this year.
The new ‘Plimsoll Industry Analysis: Manned Security’ gives an instant performance rating on the top 300 companies in the market. Each company has been rated as ‘Strong’, ‘Good’, ‘Mediocre’, ‘Caution’ or ‘Danger’ according to their latest performance.
A graphical and written analysis tells the reader which companies are in trouble and who is ‘getting it right.
Readers of Security Management Today Online are entitled to a GB pound 50 discount on this new Special Edition. Call 01642 626400 for further details and quote reference PR/SV51.
