Global cyber terrorism offering growth opportunities for Ultra
INTERNATIONAL tensions are likely to improve business opportunities for defence supplier Ultra Electronics.
The group, which has key operations in Birmingham and Rugeley, said cyber terrorism, aircraft build rates and airport infrastructure developments all offered opportunities for growth.
Ultra, which has announced a 12% increase in full year pre-tax profits, said 70% of its sales now came outside the UK and this was a margin it was keen to uphold.
The broader security and cyber markets now represent over 15% of the group’s revenue and continue to develop as areas of preferential customer spend, driven by an increasing level of terrorist, organised crime and state-sponsored cyber-attacks globally.
“The additional funding announced in many countries for addressing this cyber threat emphasises the increasing focus on this element of security. Covert surveillance and legal intercept of electronic communications continue to be effective ways of identifying and negating the threat.
“Ultra has highly specialised capabilities in secure communications, networks and a broad range of cryptographic equipment and management systems. The group enhanced its portfolio of relevant capabilities in 2011 and won competitive contracts in the UK and US to develop next generation solutions; Ultra is well positioned to benefit from demand for enhanced cyber warfare defences around the world.”
The group said its strategy was to constantly broaden its portfolio of products and services so they were positioned to meet the expanding needs of the global defence, security, transport and energy markets.
“Ultra has a broad customer base worldwide, with sales outside the UK now representing about 70% of group revenue. Ultra is strongly cash-generative and has the balance sheet strength to continue its investment in market sectors where customers preferentially focus their spend,” it said.
“The group’s security and civil markets contain niches that have higher than average growth potential as the cyber threat develops, aircraft build rates rise and airport infrastructure investment increases.”
It said these factors provided the group with a resilient business model that, together with a series of acquisition completed during 2011, would underpin progress for the remainder of the year.
The group said the level of international tension remained high, driven by the actions of rogue states and terrorist groups, political unrest and regional disputes.
“As a result, expenditure levels in Ultra’s main defence and security market sectors remain high in absolute terms, though reductions are in train. The focus of a large part of this expenditure is on improving information superiority, command and control, unattended, long-life sensors and systems and secure communications,” it said.
“There is an increased emphasis on strengthening anti-submarine warfare capabilities, especially in the Asia Pacific regions. Ultra has strong and growing market positions in these areas, which should remain the focus of customer expenditure even as current military operations are scaled back.”
Ultra’s main markets in the United States and the UK are likely to remain tough for the remainder of the year.
It said in the US, the disruption caused by a delay in the appropriation of both the FY11 and FY12 defence budgets had meant the planned level of progress on many programmes was not being made.
“While plans are being made by the Department of Defense (DoD) for coping with some level of budget reduction, the full effects of the potential sequestration process are not known. It is anticipated that political brinkmanship on budgets will continue through 2012, a Presidential election year,” it said.
