Profits up in security sector, report says

SSN Staff  - 
Sunday, February 1, 2004

RYE BROOK, N.Y. - According to a report from Security-StockWatch.com, quarterly security profits rose 18.5 percent in the third quarter of 2003.

The 2003-2004 Security-StockWatch.com Profitability Survey analyzed revenues, earnings and profit margins for 100 security companies in six groups – bio-defense, environmental security, fraud prevention, military defense, network security and physical security.

Military defense contractors were the most profitable security companies, the survey said. Boeing, General Dynamics, Northrop Grumman, L-3 Communications and Lockheed Martin all placed in the top 10 highest-earning security companies.

Two-thirds of the 100 companies improved earnings in the third quarter over the same quarter in 2002.

By segment, environmental security posted the largest earnings gain at 142.1 percent. Military defense was up 64.4 percent, bio-defense was up 34.1 percent, network security was up 32.1 percent and physical security was up 16.9 percent. Fraud prevention was the only sector that reported a loss from 2002 to 2003.

According to Ed Johnson, a financial analyst and author of the report, it is not surprising that a majority of the companies in the report are doing well.

“We are vulnerable to all sorts of attacks: bio-terrorism, dirty bombs, environmental terrorism, Oklahoma-type explosions, suicide bombers, crime in the workplace and criminal acts,” he said. “Spending is on the rise sharply worldwide to safeguard against these threats and the 100 companies covered in our Profitability Survey are on the receiving end of much of that spending.”

Collective earnings for trailing 12 months (TTM) at the 17 physical security companies that SecurityStockWatch.com covers were $1.17 million, up significantly from the previous TTM, when the companies posted a collective loss of $104.6 million.

Profit margins for the TTM were 5.4 percent, which was also up substantially from the previous TTM, when the margin was only -0.5 percent.

The free survey is online at www.securitystockwatch.com.