cece-cema economic forum - chris sleight - european construction markets
DESCRIPTION
Construction Equipment Market-EuropeTRANSCRIPT
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPEAN CONSTRUCTION
MARKETS
Chris Sleight
Editor
International Construction
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
CONTENTS
Europe in a global context
Economic forecasts for European construction markets
European contractors
Other indicators
Construction equipment market
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPE IN A GLOBAL CONTEXT
Growth trends and relative size compared to other markets
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
GLOBAL ECONOMIC GROWTH IN 2013
EU 0%
US 1.9%
LAm 3.4%
MENA 3.1%
S Af 5.6%
CIS 3.4%
JP 1.6%
RoA 7.1%
WORLD 3.3%
SOURCE: IMF
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
CONSTRUCTION GROWTH IN 2013
-2.5% +4.5%
+5.0%
+5.5%
+6.0%
+6.0%
+4.0%
+7.5%
WORLD +4.5%
+5.0%
Various sources
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
RELATIVE MARKET SIZE
24% 18%
8%
3%
1%
4%
7%
33%
WORLD ~ US$ 7,500 billion
EUROPE ~ US$ 1,800 billion
2%
Various sources
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPE IN A GLOBAL CONTEXT
Only regional global construction market still in recession
Still a very large market
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPEAN MARKETS IN DEPTH
Many sources & forecasts (FIEC, Euroconstruct, IHS Global Insight++)
Exact numbers may differ
Some specific differences of opinion
Trends & outlook similar
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
MAJOR MARKETS IN 2013
UK -2.8%
IT -3.8%
FR -3.3%
ES -10%
Big 5 (Big 4.5)
~ 70% of European construction output
~ -3% growth in 2013
DE +1.9%
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
THE GOOD
DE +1.9%
Little growth within EU Germany is biggest & best
Most promising regional markets are EU neighbours
NO +5.8%
AT +0.6%
TK +12% (?)
RUS +6%
BE +0.1%
CH +0.2%
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
THE BAD
UK -2.8%
IT -3.8%
FR -3.3%
0% to -5% trend in
countries
representing
~55% of
European
construction
output
SE -0.2%
FI -2.1%
PO -4.0%
CZ -1.9%
NL -4.8%
DK -0.5%
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
THE UGLY
IRE -8%
ES -10%
Peripheral markets still deeply distressed
6-7 years of recession
Spanish market 40% of pre-crash size
CY -20%
PT -15%
GR -30%
RO -18%
BU -9%
SL -9%
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
LONG TERM CONSTRUCTION GROWTH
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014* 2015*
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
CONSTRUCTION OUTPUT ( BILLION)
900
950
1000
1050
1100
1150
1200
1250
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013* 2014* 2015*
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
LONG TERM GROWTH TRENDS
2011 recovery stalled now in second dip Triggered by threat of Greek default
Recession flattening out in 2014/15? Market value has fallen back to late-1990s levels When it returns, growth will be weak in global terms
The boom year of 2006 saw +4.5% growth
European policy focussed on austerity, not growth No quick solution to Euro Zone debt crisis
Long-term construction market weakness
Europe is still a big market ~24% of global output
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPEAN CONTRACTORS
Revenue & profitability trends
Strategies in the face of weak home markets
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPEAN CONTRACTORS THE CE-100
246 265
297
334
384 407
378 379 406
439
5,28%
5,66%
5,75%
6,92%
7,19%
5,97%
5,02% 5,01%
4,40%
4,18%
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
50
100
150
200
250
300
350
400
450
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenues ( billion) Operating margin (%)
SOURCE: Construction Europe
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPEAN CONTRACTORS
Revenues climbing
Profitability at all-time low of 4.18% operating margin
(Global average 4.3%)
Increased competition over work
Large contractors chasing smaller contracts
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPEAN INTERNATIONAL REVENUES
0
20
40
60
80
100
120
140
160
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Developed world Emerging markets
SOURCE: EIC/International Construction
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EMERGING MARKET FOCUS
Large European contractors generate ~25% of their revenues outside their home (national)
market
International revenues by European contractors have doubled in 10 years
Total revenues up ~70% in same period
~40% of international revenues from emerging markets
~25% 10 years ago
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
OTHER INDICATORS
Market sentiment
Share prices
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
CE BAROMETER - MARKET SENTIMENT
2007 2012 2011 2010 2009 2008 2013 H1
+
-
SOURCE: Construction Europe
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
MARKET SENTIMENT
No clear month-on-month trend in 2013
Indicates flat market/turning point
Results in Q3 have been better
Survey positive on future sentiment
Expect return to growth within 12 months
But historically over-optimistic
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
SHARE PRICES
80%
90%
100%
110%
120%
130%
140%
150%
160%
Dow CET
2010 2011 2012 2013 TD
SOURCE: Construction Europe
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
SHARE PRICES
Construction shares are cyclical Greatest growth among aggregates/cement
producers
Weak profitability remains for contractors & equipment
Construction shares have missed-out on 2013 rally Does construction reflect the true economic
picture?
Is the Dow the new safe haven? Gold declining, low bond yields
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
EUROPEAN CONSTRUCTION EQUIPMENT
MARKETS
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
CE MARKET WESTERN EUROPE
0
50.000
100.000
150.000
200.000
250.000
1990199119921993199419951996199719981999200020012002200320042005200620072008200920102011201220132014
SOURCE: Off-Highway Research
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
WEAK RECOVERY
Rebound of 2010/2011 stalled
Euro crisis damaged confidence again
Banks lending less than in pre-crisis years
Many young machines on market
Lower construction output = less demand for equipment
But volumes still feel unnaturally low
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
CE MARKET SPLIT Q1 2013
DE; 21%
RUS; 15%
TK; 13% UK; 12%
FR; 12%
IT; 3%
Others; 24%
SOURCE: CECE
Total volume ~ 32,500 units
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
CE MARKET IN 2013
Historically low volumes (similar to mid 1990s levels)
Market will fall -5% to -15% in 2013
~ 28% of European sales in lesser regulated markets
Recovery in 2014/15?
Growth could be high, but volumes historically low
Will take time to get back to full health
Pent-up demand in Europe (?), especially as fleets age
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
OVERVIEW
Most indicators point to recovery in 2014/15 Growth in EU likely to be weak in the long-term Europe remains a major construction market
~24% of global output Increasing opportunities in lesser regulated
European markets (CE manufacturers and contractors)
Emergence/maturation of new players? Chinese manufacturers seeking European
markets
Handful of Turkish & Russian manufacturers
-
FIRST FOR GLOBAL CONSTRUCTION INFORMATION www.khl.com
THANK YOU
Questions, comments, feedback, more information
www.khl.com
Tel: +44 (0)1892 786205