|
Greater use of debt financing, changes to capital structures in the offing
Thirty-five percent of E&C CEOs expect to finance their companies’ growth through the debt markets, compared with 24 percent of the total survey population. Seventy-one percent also plan to change their capital structure, versus 61 percent of the overall sample. The finding may reflect the traditional lack of enthusiasm for the sector in the capital markets; E&C companies are characterised by relatively low margins and high earnings volatility, features institutional investors generally dislike.
Risk of inflation in the supply chain
Thirty-nine percent of E&C CEOs are concerned about inflation. This is broadly in line with the overall average, but it is rather surprising; inflation could well represent a particular challenge for many E&C companies, given the prevalence of fixed-price, long-term contracts that make it difficult or impossible to pass on inflation in the cost base to the end customer.
Growth prospects shifting east
Like their peers in other sectors, E&C CEOs are looking east; 71 percent of those with operations in Asia anticipate doing more business in the region over the next 12 months. E&C CEOs are much more pessimistic about the prospects in Western Europe. Only 31 percent of those with a presence in the area expect to see any growth. Indeed, 28 percent expect revenues to fall.
Risk management focus increases
Most E&C CEOs are focusing on risk management to a greater extent, in common with CEOs in other industries. They are concentrating mainly on integrating risk management with their business units, reassessing their risk tolerance, allocating more resources to risk-related information gathering and analysis, and creating remuneration systems that reward good risk management.
Related material
Thought leadership |
 Engineering growth
Global engineering & construction industry mergers and acquisitions analysis - 3Q 2009
|
 Corruption prevention in the engineering & construction industry
Outlines corruption issues, why it's a hot topic within the industry, and key questions.
|
|
 Engineering change
Potential impact of revenue recognition on the engineering & construction industry
|
 Infrastructure in India: A vast land of construction opportunity
Looks at opportunities in India, including structuring possibilities and some challenges overseas participants may face.
|
|
|
|
|
