Challenging contracting conditions hurt consultancy’s revenues

Consulting firm Booz Allen Hamilton reported a 3.5 percent decrease in revenues in the third quarter of its 2013 fiscal year, citing lower demand and challenging market conditions for government contractors.

The company reported revenues of $1.39 billion in the quarter ending Dec. 31, 2012, down from $1.44 billion during the same period in the previous year. Net income for the quarter was $56.2 million, down from $62.8 million the previous year. The company’s fiscal year begins in April and runs through March.  

Booz Allen Hamilton was focused on increasing productivity in the “uncertain federal budget environment,” said Chairman, CEO and President Ralph W. Shrader. “At every level in our company, we are making changes to ensure our cost competitiveness to win and perform work,” Shrader said in a statement.

Booz Allen’s statement said the company expected a “continuation of current macro-economic trends,” and was not including a possible impact from across-the-board federal spending cuts known as sequestration. But, in an email sent to staff on Wednesday, Shrader said that the “broader threat of sequestration” had been harder on the market than the company had anticipated. The potential cuts have now been delayed until March 1.

Not all government contractors reported gloomy financial conditions. Boeing Co. on Wednesday announced strong yearly earnings for 2012, but during a conference call warned of “uncertainty” in the U.S defense and government markets.  The company announced layoffs at a Texas facility earlier in January, citing Defense Department budget cuts. A spokesman told Government Executive that the company would like lawmakers to avoid sequestration, but is “making the changes necessary to compete and grow in this environment.”

Other government contractors including Lockheed Martin Corp. and Raytheon Co, have shrugged off the threat of sequestration in their 2013 forecasts. General Dynamics Corp., which announced a $2.1 billion loss in the fourth quarter of 2012, did not mention sequestration specifically, but did say that slower defense spending and lower market demand were eroding business conditions.

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