Article from: www.thenewspaper.com/news/32/3242.asp
8/26/2010Photo Ticket Firm Redflex Approaches Zero Profit
Australian red light camera giant blows $137 million in photo ticket revenue.
Despite collecting A$137 million in revenue from automated traffic ticketing, the Australian photo enforcement giant Redflex Traffic Systems yesterday announced its net profit before tax had fallen to a mere $442,000 for the first half of 2010 -- a 92.6 percent drop. Redflex remains the number one player in the US market with US motorists providing 79 percent of the company's ticket revenue. Redflex management, however, blamed recent losses primarily on "considerable public opposition" to photo radar and red light cameras in the US.
Earlier this year, public protests organized by the group CameraFraud.com helped convince Arizona Governor Jan Brewer (R) to shut down the statewide photo radar program run by Redflex. This cost the company $13.1 million in expenses and write downs. Similarly, as cities elsewhere in the country have decided to cancel their photo ticketing programs, Redflex has been forced to write down another $2.8 million in canceled contracts.
"Citizen-led ballot initiatives at both municipal and state levels are potential threats," the company warned.
Redflex explained to Australian investors that it would fight back against the public through a "managed media interface." In Arizona, the company cited the creation of the Safer Arizona Roads Alliance as a front group to advance the firm's corporate agenda in the guise of a non-profit "grassroots" organization. Redflex highlighted a similar effort it is undertaking in Illinois through a "group of advocates."
Tough market competition accounted for additional losses. Arizona-based rival American Traffic Solutions (ATS) filed an ambitious lawsuit that cost Redflex $4.3 million in legal expenses, even though the Australian firm won the case. ATS also expanded its market share significantly in buying out the German firm Traffipax and the UK firm Lasercraft, bringing Redflex and ATS even in red light camera deployments. Overall, however, Redflex claimed a 47 percent market share with ATS taking 40 percent and Xerox-owned Affiliated Computer Services (ACS) dropping to a mere 9 percent.
ACS, the offshoot of Lockheed Martin IMS, used to hold the number one position in US automated ticketing machines. It has since shifted focus to ticketing in non-US markets. Redflex likewise has looked aggressively to install its products in friendlier, authoritarian regimes. Redflex recently signed three contracts in Saudi Arabia worth $34 million, added 36 new cameras in Qatar, delivered $3 million in cameras for Hong Kong and has secured approval for its products in Turkey.
International exchange hit the Redflex bottom line as an eighteen percent drop in the value of the US dollar against the Australian dollar cost the company $19 million. The company's net debt now stands at $43 million. Redflex announced it would save money through new software that would "automate citation screening" and reduce the human effort involved in collecting on a ticket by seven percent.