Global - Construction, December 2019

Global - Construction
REFERENCE CODE: MLIP3038-0018

PUBLICATION DATE: Dec 2019
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Executive Summary
Executive Summary
Market value
The global construction industry grew by 3.8% in 2018 to reach a value of $4,124.2 billion.
Market value forecast

In 2023, the global construction industry is forecast to have a value of $5,154.1 billion, an increase of 25%
since 2018.
Category segmentation
Non-residential construction is the largest segment of the global construction industry, accounting for 56.4%
of the industry's total value.
Geography segmentation
Asia-pacific accounts for 32.3% of the global construction industry value.
Market rivalry
Rivalry in the construction industry tends to be accumulated in segments and niche markets in which
players’ operations are similar. The industry is mainly fragmented in the residential construction segment,
while a few large players dominate in the non-residential segment.

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Market Overview
Market Overview
Market definition
The construction industry is defined as the value of work put in place annually in the residential and non-
residential segments. Civil engineering work is excluded. Where possible data has not been seasonally
adjusted.
The residential construction market is defined as the value of work put in place annually for residential
buildings. This includes apartments, houses, and similar buildings, but not hotels etc. Market value includes
new build and also renovations and repair; it includes construction of buildings and also preparatory work
and completion (demolition, site preparation, electrical and plumbing installation, etc).
The non-residential construction market is defined as the value of non-residential buildings constructed.
These include, but are not restricted to, buildings intended for retail, commercial, manufacturing, and
educational purposes.
All currency conversions were calculated at constant average annual 2018 exchange rates.
For the purposes of this report, the global market consists of North America, South America, Europe, Asia-
Pacific, Middle East, South Africa and Nigeria.
North America consists of Canada, Mexico, and the United States.
South America comprises Argentina, Brazil, Chile, Colombia, and Peru.
Europe comprises Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece,
Ireland, Italy, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, Turkey, and the
United Kingdom.
Scandinavia comprises Denmark, Finland, Norway, and Sweden.
Asia-Pacific comprises Australia, China, Hong Kong, India, Indonesia, Kazakhstan, Japan, Malaysia, New
Zealand, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.
Middle East comprises Egypt, Israel, Saudi Arabia, and United Arab Emirates.
Market analysis
The global construction industry saw revenue growth decelerate to a slow rate in 2018. In the forecast
period growth is expected to level out at a more moderate rate.
The industry had total revenues of $4,124.2bn in 2018, representing a compound annual growth rate
(CAGR) of 5.5% between 2014 and 2018. In comparison, the Asia-Pacific and US industries grew with
CAGRs of 6.2% and 6.5% respectively, over the same period, to reach respective values of $1,333.5bn and
$1,294.0bn in 2018.
Asia-Pacific had the largest share of the sector’s value in 2018. China, home to this region’s largest sector,
is refocusing its economic development on service industries, and whilst its manufacturing industries are
still growing, the non-residential construction pipeline generated by these industries showed the slowest
growth in 2018 versus office buildings. In Japan, the lifting of a ban on gambling resorts in July 2018 has
triggered massive investment in casinos in Japan, and the most valuable projects last year were in the
leisure and hospitality segments. India meanwhile has an emerging ecommerce sector, which over the next
several years will generate an increasing demand for storage and logistics buildings.

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Although the US sector recovered from the slight decline of 2017, growth continued to be restricted in the
commercial segment. This in an ongoing trend and is particularly due to the decline of high street retail in
the face of ecommerce. However, the same companies which are arguably at the root of this trend – tech
companies like Google and Amazon – are generating a significant demand for data centers, which has
boosted the project pipeline.
The largest non-residential construction sector within Europe in 2018 was Germany, which saw major
growth following a slight slowdown the previous year. However, the two next-largest sectors, in the UK and
France, experienced slowing growth. This was the average trend of the top eight sectors; Turkey saw the
worst decline, although this did not drag significantly on other European sectors. Brexit was the leading
factor constraining UK construction, and uncertainty over the outcome of the process has been felt by its
trading partners as well.
Cities were the focal points of shifts in the European residential sector in 2018. The German housing
market is seeing a continuing housing shortage in major cities, as well as increases in housing prices.
Some parts of Berlin have experienced rent rises of as much as 10% annually over the last few years, with
the population increasing by around 40,000 people a year.
The performance of the industry is forecast to decelerate, with an anticipated CAGR of 4.6% for the five-
year period 2018 - 2023, which is expected to drive the industry to a value of $5,154.1bn by the end of
2023. Comparatively, the Asia-Pacific and US industries will grow with CAGRs of 4.5% and 4.6%
respectively, over the same period, to reach respective values of $1,663.3bn and $1,619.0bn in 2023.
China’s ongoing urbanization and positive developments in regional economic conditions are expected to
drive demand and growth for residential construction over the forecast period. Residential construction was
the largest segment of the Chinese construction industry in 2018, and the largest residential segment in the
world. It will definitely continue at these rankings, despite moderate fluctuations in growth and a continuing
drive for industrial and infrastructural development.

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Market Data
Market Data
Market Value
The global construction industry grew by 3.8% in 2018 to reach a value of $4,124.2 billion.
The compound annual growth rate of the industry in the period 2014-18 was 5.5%.
Table 1: Global construction industry value: $ billion, 2014–18
Year $ billion € billion % Growth

2014 3,329.2 2,818.9
2015 3,514.5 2,975.9 5.6%
2016 3,742.3 3,168.8 6.5%
2017 3,973.1 3,364.2 6.2%
2018 4,124.2 3,492.1 3.8%
CAGR: 2014–18 5.5%
Source: MARKETLINE
Figure 1: Global construction industry value: $ billion, 2014–18
Source: MARKETLINE

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Market Segmentation
Market Segmentation
Category Segmentation
Non-residential construction is the largest segment of the global construction industry, accounting for 56.4%
of the industry's total value.
The Residential construction segment accounts for the remaining 43.6% of the industry.
Table 2: Global construction industry category segmentation: $ billion, 2018
Category 2018 %
Non-residential Construction 2,325.8 56.4
Residential Construction 1,798.3 43.6
Total 4,124.1 100%
Source: MARKETLINE
Figure 2: Global construction industry category segmentation: % share, by value, 2018
Source: MARKETLINE
Geography Segmentation
Asia-pacific accounts for 32.3% of the global construction industry value.
United States accounts for a further 31.4% of the global industry.

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Table 3: Global construction industry geography segmentation: $ billion, 2018
Geography 2018 %
Asia-pacific 1,333.5 32.3
United States 1,294.0 31.4
Europe 1,248.2 30.3
Middle East 78.5 1.9
Rest Of The World 169.9 4.1
Total 4,124.1 100%
Source: MARKETLINE
Figure 3: Global construction industry geography segmentation: % share, by value, 2018
Source: MARKETLINE

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Market Outlook
Market Outlook
Market Value Forecast
In 2023, the global construction industry is forecast to have a value of $5,154.1 billion, an increase of 25%
since 2018.
The compound annual growth rate of the industry in the period 2018-23 is predicted to be 4.6%.
Table 4: Global construction industry value forecast: $ billion, 2018–23
Year $ billion € billion % Growth

2018 4,124.2 3,492.1 3.8%
2019 4,332.6 3,668.6 5.1%
2020 4,539.3 3,843.5 4.8%
2021 4,730.1 4,005.1 4.2%
2022 4,943.2 4,185.5 4.5%
2023 5,154.1 4,364.1 4.3%
CAGR: 2018–23 4.6%
Source: MARKETLINE
Figure 4: Global construction industry value forecast: $ billion, 2018–23
Source: MARKETLINE

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Five Forces Analysis
Five Forces Analysis
The construction market will be analyzed taking real estate developers and contractors as players. The key
buyers will be taken as property developers, businesses, governments and individuals, and producers of
building materials and sub-contractors as the key suppliers.
Summary
Figure 5: Forces driving competition in the global construction industry, 2018
Source: MARKETLINE
Rivalry in the construction industry tends to be accumulated in segments and niche markets in which
players’ operations are similar. The industry is mainly fragmented in the residential construction segment,
while a few large players dominate in the non-residential segment.
There are numerous buyers, ranging from governments to individual consumers. Many of these buyers will
be in a strong position, especially governments and firms that put construction projects out to tender,
although individuals will have much less buyer power.
Suppliers include sub-contractors and providers of construction materials. The former tend to be smaller
and more numerous than the latter, which have greater bargaining power as the construction materials
markets are highly concentrated.
Capital barriers to entry into the construction industry are related to significant capital outlay and economies
of scale. For competing with incumbents as prime contractors on large infrastructure and commercial
projects, a new entrant must be able to achieve large economies of scale, as well as offering a wide range
of competencies, such as design, procurement, and project management, which reduces the risk of new
entrants. On the other hand, the residential construction sector, which is less concentrated, is more
susceptible to small-scale players. Furthermore, the construction industry is highly sensitive to
macroeconomic performance, which means that the attractiveness of any particular country's market can
vary significantly from one year to another.

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Substitutes in this market include opting for repair/remodeling rather than new build, or opting to rent or
lease a property rather than buying.
Buyer Power
Figure 6: Drivers of buyer power in the global construction industry, 2018
Source: MARKETLINE
There are a wide range of buyers in this market. From individuals that seek to buy residential property to
property developers, governments which may engage in big residential projects and civil engineering
(infrastructure) work. Property developers looking to generate income from leases and rents will focus on
residential and non-residential projects such as apartment blocks and retail spaces. Companies in many
verticals may wish to have industrial or commercial premises built, or civil engineering projects such as
airports constructed. Governments assign infrastructure projects (civil engineering) such as road
construction, transportation and utility infrastructure, and other large public works.
These different categories of buyer have widely-differing amounts of power. Government-funded
infrastructure and housing projects are usually put out to tender. The criteria for choosing the successful bid
vary from country to country, but price is usually the most important one. Construction contractors have
limited power in the tender procedures that are usually followed in government infrastructure and
commercial projects, as the power of buyers over price awareness is increased. Nevertheless, price-setting
by cartels of contractors is still possible, especially for large infrastructure projects.
Property developers also have great bargaining power since they leverage the size of their marketplace,
which comprises both corporate and individual clients searching for non-residential and residential
properties. A high concentration of real estate activities to a few large property developers dilutes the power
of construction contractors.
While property developers are the largest group of buyers of residential property, individual consumers can
buy houses from residential contractors, although they have limited power as buyers in this regard. What is
more, the relatively weak ability of individual consumers to evaluate and compare prices of residential
properties – as these are distorted by the different benefits and characteristics of them – enhances the
pricing power of construction companies. House prices obey the usual rules of supply and demand, and
with a large number of sellers and buyers it is difficult to exert much buyer power. Accordingly, the
affordability of housing within a country-market may indicate the power of buyers as that is captured by the
level of supply towards demand.
Furthermore, the urbanization rate of a country plays an important role for players in an industry.
Specifically, a high urbanization rate means that the services of construction contractors, especially in non-
residential construction, are less dispensable since there is strong demand for the development of new

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infrastructure and commercial projects, along with the maintenance of existing ones. Urbanization is high in
most countries within North and South America and Europe – according to the World Bank, many
developed economies are above 80% – but it has still grown in recent years. High urbanization rates
suggest greater demand for construction services. On the other hand, most countries within the Asia-Pacific
region and Africa are characterized by low but emerging urbanization – usually less than 55% of the total
population, contrasting Japan where 92% of the population lives in urban environments. These urbanization
rates suggest that there are many non-urban regions across the country, where large scale construction
services tend to be dispensable.
Backwards integration is an option for buyers in residential construction since housing is highly important,
although for different reasons. Individuals may opt to build their own houses by surpassing construction
contractors in the value chain of construction, but this task is a minority pursuit. Property developers may
have their own construction division, although that may only be the case for large firms. However, vertical
integration is not feasible for buyers (government and property developers) in large infrastructure and
industrial projects, in which the economies of scale and the expertise of construction contractors are
essential. Thus, the power of buyers is weaker in these respects.
Overall, the power of buyers is assessed as moderate.
Supplier Power
Figure 7: Drivers of supplier power in the global construction industry, 2018
Source: MARKETLINE
For prime contractors, suppliers include producers of building materials and also sub-contractors who offer
specialist construction competencies.
The construction materials sector is typically concentrated. Cement (and concrete), iron (and steel),
aluminum and similar materials are commoditized. The production of these materials benefits from large
economies of scale; there are additional gains if a supplier has a well-developed distribution system,
notably a network of ready-mix concrete facilities. In these circumstances, consolidation is favored, which
goes against the bargaining power of players. The presence of large suppliers, particularly of cement
companies such as Lafarge and Heidelberg in most developed industries, limits the bargaining power of
contractors. The extremely high concentration of cement companies – it is common for the top five cement
companies to hold 75% or more of the market in a country – increases the power of suppliers against a
greater number of construction companies. Nevertheless, supplier power is weakened by the fact the
construction industry is very important to supplier revenues, especially for cement companies, since there
are only a few other markets where they can generate their revenues.
It should also be noted that there are few substitute-inputs available. Thus, when the price of cement or iron
rises, construction activities become even more costly, affecting the output of the industry and the profit

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margins of players. Hedging instruments are used on large scale projects to prevent volatility to some
extent, but this case applies only to large players which have that scale-power. Higher prices of inputs give
suppliers higher power. The price of iron as a mineral commodity declined significantly during 2013–2015;
since then, prices have recovered to some extent but have far to climb to come close to the late 2013 peak.
The price of cement, which is the basic non-metallic mineral and material-input in construction, is more
localized – as it is less commoditized than metallic mineral construction materials such as iron – and thus
more dependent on (local) suppliers’ production volumes and costs.
Furthermore, the availability and cost of high and low-skilled and labor is also highly important since this
industry is labor-intensive. Notably, developed industries such as that of the US, Canada, and Germany
have faced labor shortage or lack of skilled labor. This condition leads to augmented labor power and
increasing labor costs.
Finally, there are no alternatives to the services offered by sub-contractors, which specialize in certain
construction activities, although there is the possibility of the vertical integration of players in spite of high
costs. However, prime contractors generally have a wide choice of competing sub-contractors for any part
of the project. Accordingly, the large number of subcontractors undermines their suppliers’ power, while
they are able to distinguish themselves only by their product specifications and their service quality.
Overall, supplier power is moderate.
New Entrants
Figure 8: Factors influencing the likelihood of new entrants in the global construction industry, 2018
Source: MARKETLINE
The economies of scale in the construction industry are usually the most significant barrier for the entry of
new players. Barriers to entry also include a significant capital outlay for the acquisition of capital items.
However, construction companies can be relatively asset-light as the work on site can be outsourced to
sub-contractors and equipment can be hired or leased rather than being purchased. A large number of
small specialized sub-contractors lower the capital barriers for entry of contractors in the construction
market.
Construction companies acting as prime contractors on large non-residential projects face somewhat higher
barriers, as larger economies of scale are required, especially in terms of big infrastructure projects where
only large firms can compete in tenders. In contrast, the residential construction segment is susceptible to
new small scale players.
The differentiation of construction companies by the range of services (vertical integration) provided, from
design to project management to specific building skills, allows the entrance of new players as the

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homogeneity of the construction-product is reduced under these terms. Moreover, the existence of different
segment-markets (horizontal differentiation), such as residential, commercial and industrial construction,
leaves room for new entrants in specialized niche markets.
Regulation is typically stringent and complex. It covers planning permission and zoning, building site health
and safety, and the safety and security of the buildings themselves. Compliance with this government
regulation increases costs. Building restrictions limit supply, having a devastating effect on housing
affordability and demand. These restrictions tend to be stricter in the most developed industries such as the
US and the European. What is more, in some countries in the Asia-Pacific region, such as China, foreign
contractors have limits to their operation, either through limited ownership or the funding requirements for a
project. However, many developing countries across this region, such as India, have sought to promote
public private partnership for infrastructure investment.
Government policies also affect the industry outside of the regulation framework. For example, tax
deductions for mortgage payments, tax incentives, subsidies and infrastructure development strategic plans
can positively affect demand in the construction industry. Affordable housing programs for low income
groups, as well as national infrastructure development plans, are common in developing industries in the
Asia-Pacific and South American regions, supporting construction activities.
Another aspect taken into account by construction companies for entering a particular industry is the
access to and cost of construction materials and machinery. Specifically, the scarcity of construction
materials and machinery within a country leads to imports, which increase the cost of production, while that
cost is also affected by fluctuations in the local currency. Furthermore, the likelihood of new entrants is
reliant on the macroeconomic outlook of the country-market as construction is one of the most vulnerable
industries to the macroeconomic environment, driving but also driven by economic growth. The growth of
construction activities in the Asia-Pacific region will revolve around infrastructure investment, as that is the
main trend in the largest industries of this region, namely China, India and Japan. This also applies in
relatively smaller Asian countries-industries which have an underdeveloped infrastructure, and therefore
plenty of room for growth. The improving macroeconomic environment in Europe also means an increase in
infrastructure investment, which has been limited in recent years amid austerity. Moreover, the projected
protraction of relaxed monetary policy in Europe over the next few years will continue to fuel demand in
residential construction. In contrast, stiffened lending in the US is to slow demand in residential
construction, but a series of infrastructure and commercial projects under development will compensate for
this.
The Asia-Pacific industry was the most lucrative in 2018, accounting for 32.3% of the global value, followed
by the US and Europe, with 31.4% and 30.3%, respectively. Non-residential construction accounted for
56.4% of the total value of the industry in 2018, with the other 43.6% comprised by the residential
construction segment.
Overall, the threat of new entrants is moderate.

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Threat of substitutes
Figure 9: Factors influencing the threat of substitutes in the global construction industry, 2018
Source: MARKETLINE
The main substitute for some clients is to opt for buying, renting or leasing existing buildings rather than for
a new build. As a matter of fact, substitution in this industry is apparent between existing and new building
stock, as well as between renting/leasing and buying transactions. Only in times of economic uncertainty
are the options of leasing or renting an existing property over buying (or renting/leasing) a new one
enhanced. Overall, the value of the construction industry is negatively correlated with renting/leasing
existing properties, since demand for the latter has price-sensitive characteristics as the value of new
properties is usually higher than that of existing (similar) ones, while build-to-rent activities are not
prevalent. Moreover, the diversification of players in activities such as renovation and repairs that revolve
around substitutes is not sufficient, as these operations are supplemental to their core operations.
Assessing the relative costs and benefits of these substitutes is difficult. It will depend on factors such as
market rent levels, fitness for purpose of the available buildings, mortgage interest rates, and so on. In the
case of non-residential (commercial) construction, substitutes are less applicable since demand tends to be
inelastic in that segment on the grounds of searching for fitness for purpose buildings. In terms of
residential properties, the benefits of the option of leasing or renting a property are dictated by the
affordability of buying it.
Furthermore, switching costs that exist between buying and renting a residential property are determined by
the mortgage interest rates, which are a crucial demand-factor in residential construction. Additionally, it
should also be noted that in the residential sector, individuals may be dissuaded from renting if the law
favors landlords, or if landlords themselves are unwilling to offer long-term rental agreements.
Finally, the existing stock of properties within a country, and their affordability, dictate the substitutability of
new properties, especially in residential construction.
Overall, the threat of substitutes is assessed as moderate.

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Degree of rivalry
Figure 10: Drivers of degree of rivalry in the global construction industry, 2018
Source: MARKETLINE
The construction industry comprises a large number of small companies alongside a few large players. The
reduced level of homogeneity of construction activities, through the means of offering different products for
the same service, alleviates rivalry among players. In fact, rivalry tends to be accumulated in segments and
niche markets, in which players’ operations are similar.
The non-residential construction segment tends to be more concentrated than the residential segment as
the former consists of a few large players, which mainly compete for tenders related to big infrastructure
and commercial projects. In this regard, economies of scale and specialization are even more crucial for
achieving a competitive advantage in this segment, which stands between monopolistic competition and
oligopoly. On the other hand, the residential construction segment tends to be fragmented by a relatively
large number of smaller players, since the scale of these projects does not demand expertise and
significant financial resources, while the standardization of these projects leads to cost efficiency. As a
result, players in the residential segment of the industry mainly compete on price-cost, inducing a near-
perfect competitive environment. Indeed, the residential segment of most of the European industries is
highly fragmented by small and medium-sized players.
Overall, domestic industries within Europe are less concentrated than their counterparts worldwide, while
competition is intensified as contactors tend to compete across the region. Moreover, the US is quite
fragmented according to locations and niche markets. In contrast, domestic industries within the Asia-
Pacific region are more concentrated than the developed markets in Europe and the US. This is mainly due
to the fact that many large contractors engaged in infrastructure projects are state-owned, preventing the
expansion of private players, while the presence of foreign players tends to be limited. Accordingly, leading
players in most of these industries are local and reliant on these domestic industries, avoiding competition.
Rivalry in the construction industry is dictated by the gap between demand and supply for new properties –
since renovations and repairs are a less lucrative source of revenue for players.
Rivalry is intensified by the fact that it is hard for players to expand as that expansion is entirely reliant on
demand rather than their own supply. What is more, the volatility of production costs, regarding the cost of
construction materials added to labor costs, can affect the profitability of industry players. This can
ultimately have an impact on their competition capacity and sustainability. The development of new
technologies and techniques in construction, particularly the adoption of building information modelling
(BIM) and design for manufacturing and assembly (DfMA), will favor concentration to largest players.
Specifically, the high cost of adoption of these technologies that lead to improved efficiency through
reduced costs in terms of designing and building, and a shorter operating cycle, is an impediment for
smaller players.

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The business model of players, in terms of operating on an own account, contract or project-fee basis, is
crucial for the terms of competition. In the first case, players need to adopt vertical integration, with an
asset-light based model being essential. Specifically, when construction companies operate on their own
account it means that they produce on their own premises, which extensively entails greater financial
leverage for funding these projects. Consequently, financial risks are greater through the ownership of
these projects (build-to-suit or build-to-sell), but so are profit margins since construction firms can fully-seize
the market-value of them.
In the case of contract and project fee basis operations, exposure to financial risks is reduced, similar to
profit margins, as construction firms are paid a specified fee for their services, so their income may be
guaranteed, irrespective of demand for that property.
Furthermore, the range of services offered, from design to project management to specific building skills,
enhances differentiation. For instance, vertically integrated contractors can compete for design-build
projects, which are one-stop-shop project delivery as the client assigns both the design and building of a
project to the same entity. Through this vertically integrated business model, a construction firm can
achieve cost-effective synergies on designing, while it can also attain a shorter operating cycle as the
delivery time of a project is faster. On the other hand, the design-bid-build construction delivery method,
which is the most prevalent, is less complex for construction firms as they undertake responsibility for the
building part of a project, specializing in this core operation.
Diversity is also essential to avoid negative demand shocks based on macroeconomic factors that may
affect certain segments or even the whole industry. Many companies have diversified in terms of the
industry segments they operate in, as similar competencies are required in building projects with different
end-uses. However, all segments tend to be affected in an economic downturn (there may be an exception
if a government responds to recession by increasing its spending on particular types of construction).
Geographic diversification can offer more protection against the vagaries of any one country-market, but
may be difficult for the typically small construction firm. These factors mean that when macroeconomic
conditions are tough, rivalry will tend to increase significantly.
It is fairly easy for industry players to ramp their output up and down in response to demand. Employees
may be taken on for individual projects, for example, rather than being retained permanently on the payroll,
but storage costs are significant regarding fixed assets. Accordingly, barriers to exit are usually high,
intensifying rivalry, but that depends on the asset-strategy (operating leverage) of a construction firm.
Overall, the degree of rivalry is assessed as strong.

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Competitive Landscape
Competitive Landscape
Summary_Text
The US and Europe are home to some of the world’s largest multinational construction companies. Growth
in both these markets is being driven by mixed-use developments which provide opportunities for leading
players to compete for particularly high-value tenders. The US is also home to the world’s largest data
center construction market, which is a hotbed for innovation and competition. Europe, meanwhile, is
notable for its high adoption rates of building information modelling technology, and 2018 was a particularly
important year for regulation requiring companies to join the transition.
The landscape in China, home to Asia-Pacific’s largest construction industry, is dominated by a handful of
construction behemoths, most of which are subsidiaries of the same state-owned corporation. This level of
consolidation is contrasted by the other large markets in the region. China notably leads the region in the
burgeoning data center construction segment, but India is catching up. Another major driver of competition
in Asia-Pacific is the expansion of goods manufacturing and exports, which is driving demand for industrial
capacity. The situation is different in China, where a transition to service industries is driving demand for
office buildings.
Heading_1
Which leading players were particularly notable in 2018?
Body_Text_1
Bechtel Corp
As of 2019, Bechtel has ranked number one on the ENR Top 400 List of American contractors for 21 years
running. It leads the industrial segment of the non-residential segment, with approximately $3.5bn of its
$5bn total projects value in 2018 consisting of industrial projects. It is the main contractor or subcontractor
for several multi-billion dollar chemical facilities, the largest of which is a nuclear waste treatment center in
Washington worth $17bn and operating on a 20-year schedule. Its largest commercial project in recent
years has been the Bechtel Family National Scout Reserve, with an estimated value of around $440m.
Lennar Corp
Lennar Corp became the largest homebuilder in the US in 2018 through its acquisition of the CalAtlantic
Group. Its end-of-year revenues had risen 63% on 2017 to $20.6bn. The year also the saw the success of
Lennar’s ‘Everything Included’ initiative, reducing post-purchase costs for home-buyers and giving it a
competitive edge, particularly in the aspirational and first-time buyer markets.
Vinci SA
Vinci is one of the largest construction companies in Europe, and has been recovering from a financial
slump around 2016. Last year, its revenues grew by 8% year-on-year to $52bn. Most of its biggest projects
in the non-residential segment last year were hotels and office buildings, and the company followed the
popular strategy of incorporating these into mixed-use developments alongside residential units. However,
an industrial project currently in the planning phase is by far the most valuable project in the company’s
pipeline, set to begin construction in 2021. The Ivry-Paris XIII Waste Treatment Plant Reconstruction will be
worth an estimated $4bn.
Ferrovial SA
Ferrovial SA is a heavy infrastructure and building construction contractor with a major presence in Spain’s
non-residential segment. The company saw its revenues grow by 16.56% year-on-year in 2018, despite the

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cancellation in 2017 of the most valuable project to which it has recently been contracted. Work on the
Alhama Paramount Park development in Murcia was first delayed in 2016 for financial reasons, and was
then cancelled altogether the following year for financial reasons. The largest section of the development to
which Ferrovial had been assigned was worth an estimated $1.3bn. The company nevertheless has four
major commercial projects in the execution phase, mainly consisting of hospital complexes, which is
keeping its non-residential division stable.
China State Construction Corp Engineering Ltd (CSCEC)
CSCEC is a provider of construction contracting and real estate services, and in terms of its project
pipeline, it was the biggest player in China’s non-residential segment in 2018. The company continues to
see year-on-year revenue growth, boosted not only by projects in China but around the world, particularly in
Africa and Asia. CSCEC’s most valuable non-residential projects in 2018 were in the leisure and hospitality
segment, and included a $20.4bn amusement park in Danzhou. The growing middle class is one
explanation for the volume of massive non-residential developments such as this, and suggests that the
growth in demand will only continue.
Sun Hung Kai Properties Ltd
With revenues of almost $11bn in 2018, Sun Hung Kai is China’s largest real estate developer and the
second-largest in the world after an American shopping mall developer. Its revenues have been fairly
consistent since 2016, and whilst the profit margin fell in 2018 on the previous year, it was still just over
50%. The company has been planning to expand its assets in mainland China, having focused much of its
land bank in Hong Kong. 43% of this land bank consisted of properties still under construction in 2018,
demonstrating Sun Hung Kai’s huge ambitions for expansion. This balance of completed and under-
construction properties is impressive given the company’s sizeable and consistent profit margins.
Heading_2
Which residential markets were affected by new regulations or policies in 2018?
Body_Text_2
In January 2018, mortgage rules changed in Canada in such a major way that the change has been widely
blamed for the slowdown in the housing market and, consequently, the residential construction segment.
The central change was to the threshold for the so-called stress test, under which buyers have to qualify for
a mortgage at a rate either 2% above the negotiated rate or at the Bank of Canada’s five-year benchmark
rate, whichever is greater. Before the change, the stress test was only obligatory for buyers with a down
payment of less than 20%, but this has now been extended to all buyers. This has caused a dip in demand
in the housing market, since the stress test makes it difficult for many prospective buyers to secure a
mortgage.
The rollout of the Real Estate Regulation and Development act (RERA) in 2016 was still having major
consequences for Indian residential construction companies in 2018. RERA sets out new disclosure norms
between builders and buyers to safeguard the latter’s interests and calls for more efficient resolutions to
property disputes. These measures have made the industry more transparent, but have also resulted in
costly changes to business practices and adaptations which have floored some small- to medium-sized
businesses. One example of the many constraints RERA has put on traditional corrupt practices in the
industry is through the policing of amendments to property plans by rogue contractors, who in the past have
been notorious for forcing buyers’ consent to changes to suit their own needs.
The direct result of this on the structure of competition in the industry has been consolidation at the top,
with the leading players who managed to adapt sweeping up contracts which had before been distributed
more evenly across a wider playing field. This has good consequences for buyers, and since the market
remains diverse even with the consolidation, it will probably make the residential construction segment
more productive and prosperous after the short-term shock to the system.
The industry in Indonesia has been massively heated up in recent years through the government’s One
Million Homes program, which was introduced in 2015. The program takes steps to achieve one million
single-family residential units, either in the form of houses or apartments, every year. The government’s
2019 goal was to reduce the housing deficit from 11.4 million homes to 6.9 million, and it has managed to

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surpass that target. 2018 was the first year to see the target actually beaten, with 1.13 million new homes
being constructed. 70% of homes are earmarked for lower-income buyers, with the remaining 30% targeted
at the higher-income part of the market.
The impact on players in the residential construction segment comes mainly from more accessible
mortgages and financing options, which ensure a reliable stream of buyers for their properties, and from an
abundance of government construction contracts up for grabs through a competitive tendering system.
Whilst competitive, the tendering system is fueled by such huge demand that the benefits can be spread
quite widely through the construction industry. This has been the main source of growth in the industry in
recent years.
Heading_3
How far do governments influence the non-residential segment?
Body_Text_3
There were few major changes to government regulations in the non-residential construction segment in
2018, but there were other notable developments directed by governments. In Mexico, whilst growth in the
segment has largely been concentrated around Mexico City, the government is planning to decentralize its
various departments, moving 31 of these from the capital to smaller cities. This aim of this proposal is to
decongest the capital and to distribute employment opportunities around the country. The decentralization
process is set to begin with the Education Secretariat, which will be moved from the capital to Puebla, and
will result in the relocation of 17,000 employees by 2021. It has been estimated that $7.4bn in investment
will be required over the next six years for the necessary infrastructure, connectivity and housing capacity
to accommodate the influx of government employees. This is expected to also support non-residential
construction across the country, boosting business tourism and general prosperity in local economies.
Interestingly, the movement of government departments is also going to be a long-term growth driver in
Indonesia, where the capital is being moved from Jakarta to Borneo. Jakarta is one of the fastest-sinking
cities in the world due to overpopulation and urbanization, and a 10-year plan to relocate all of Indonesia’s
offices of state to Borneo is intended to avert an ecological disaster. Whether or not moving to one of the
world’s biggest rainforests is a sensible solution, it will certainly drive demand for new building projects.
Turkey is another country where government involvement boosts non-residential construction, largely
becuase President Erdogan commissions mega-projects which generate high-value tenders for contractors.
The government also issues public-private partnerships (PPP), which have been claimed to have resulted
in 242 construction projects worth $25.4bn during 2014–2018. This is an alternative financing option
intended especially for infrastructure construction projects, although its use in airport construction has
generated non-residential developments, particularly in retail. Another less direct benefit for non-residential
construction has been the impact of increased raw material prices on competition. PPPs have given energy
to the whole construction industry in Turkey, especially since the cross-segment expertise of leading
players such as Ronesans means that a stronger infrastructure portfolio can increase their ability to
compete for non-residential tenders.
Heading_4
Which countries are leading in emerging construction markets?
Body_Text_4
The US has come to lead the emerging market for data center construction by a phenomenal distance. As
Silicon Valley tech giants consolidate the web services industry further, IT infrastructure in almost every
industry is being moved to the cloud, with established firms investing billions in digital transformation. This
trend is still in its early stages, and the need to expand capacity to meet demand for cloud-based computing
will continue to be a growth driver in the construction industry.
China leads this emerging market in Asia-Pacific. The total value of data center projects in the country’s
non-residential project pipeline exceeded those of its competitor India by almost $5bn. It looks unlikely that
China will overtake the US in data center construction any time soon, with the total data centers in the US
pipeline around 75% more valuable. Still, two of the top five most valuable projects in the world in 2019 are

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located in China, demonstrating the country’s ambitions. The majority of China’s projects are also still only
in the planning phase, ensuring a guaranteed stream of value for several years to come. ZTE Energy
Company and China Telecom are behind the two largest projects. It is likely that given the relatively high
level of consolidation in the Chinese tech and web services industries, growth in data center projects will
continue to be driven by small numbers of high-value developments.
The UK leads the data center construction market in Europe. The total value of data center projects in the
UK’s non-residential project pipeline was just under $5bn in 2018, with slightly more projects in the planning
phase than in the execution phase. This is a healthy balance, ensuring a guaranteed stream of value for
several years to come.
Heading_5
Which countries are leading technological innovation?
Body_Text_5
Of all major European construction companies, the Swedish company Skanska is perhaps the most
competitive in technological innovation, with a high take-up of cutting-edge design and building solutions
across its operations. It uses automation and robotization in the construction process, with a particular
focus on building information modelling (BIM), an intelligent 3D model-based design process. Within
residential construction, other applicable technologies include drones for surveying sites and 3D printing for
efficiency and cost-effectiveness in the manufacturing of prefabricated parts.
Fellow Swedish company NCC also distinguishes itself with technology, digitalizing the construction
processes and architectural drawings to flag up design errors before construction begins. The company has
also begun using BIM to share information more precisely and just-in-time with its suppliers. Its Virtual
Design and Construction (VDC) program visualizes the progress of construction projects to allow dialog
with customers earlier in the process, offering overviews of quality, time and cost.
Meanwhile, the rise of solar in China has been meteoric, and as the technology gets cheaper and more
versatile it is likely to become a leading theme in the residential construction segment. The Hantile is just
one instance of an innovation which will increase the versatility of solar, enabling its cost-effective use in
construction. The Hantile is a pv-solar roof tile produced by the Hanergy company, and has been launched
to great acclaim in Europe. With massive government investment in both the solar power industry and
residential construction, a major trend for integrated energy efficiency solutions will come to be a
differentiator for early-adopter companies.
At the higher end of the housing market, there is also growing demand for ‘smart home’ projects, featuring
houses and apartments with Internet-of-Things devices built in, allowing homeowners and landlords to
monitor and manage energy consumption more accurately. Like innovations in solar, this will also have the
effect of making properties more attractive to price-conscious homebuyers, driving down the cost of
electricity bills.
Heading_6
Do leading players have any common strategies?
Body_Text_6
The construction of mixed-use developments is a strong trend in leading non-residential construction
markets, and most of the biggest players in this segment are involved in combined non-residential and
residential projects. For a long time, this has been a useful means of securing planning permission from
local councils for major new developments. Projects which are primarily non-residential in terms of their
initial motivation, such as office complexes, become a more sustainable and attractive proposition for
councils if they can provide their own solutions to the residential demand they create. The incorporation of
retail developments into these projects also offers to boost the local economy, helping to compensate
communities for disruption to the landscape and costs to local councils.
In the US, as in many other countries, increasingly dense urban centers and the changing needs of
homebuyers have become the key drivers of the new boom in mixed-use developments. Urbanization,
aging populations and concerns over environmental sustainability are leading to a demand for ‘smart cities’,

MLIP3038-0018
which alongside technological innovation emphasizes economies of space. In mature economies such as
the US, smart cities are taking shape as smart developments within established metropolises. New York is
a leading example where mixed-use projects are facilitating ‘smart’ infrastructure by consolidating work,
living and leisure spaces into single close-knit developments.

MLIP3038-0018
Company Profiles
Company Profiles
Bechtel Corp
Company Overview
Bechtel Corp (Bechtel) is a provider of engineering, construction and project management services. The
company’s major services include construction, master planning, tunneling, finance, engineering,
procurement, sustainability solutions, feasibility studies, project and program management, testing and
commissioning, startup and operations, technology licensing and consulting and financing and equity
investments. It provides these services to energy, transportation, infrastructure, communications, mining
and metals, oil and gas, chemicals, water, defense and nuclear, and government customers across the
world. The company operates through its subsidiaries and regional offices across the Americas, Asia-
Pacific and Europe, the Middle East and Africa. Bechtel is headquartered in San Francisco, California, the
US.
Business Description
Bechtel Corp (Bechtel) is a global engineering, construction and project management company. It provides
engineering, procurement, construction and project management services to diverse industries including
energy, transportation, mining and metals, oil and gas, chemicals, nuclear and security and environment.
Its major services include construction, master planning, engineering, procurement, sustainability solutions,
startup and operations, modularization, tunneling, technology licensing and consulting, and financing and
equity investments. Since its inception, the company has completed over 25,000 projects in 160 countries
across seven continents.
In FY2018, the company received new order worth US$17.3 billion, as compared to US$11.8 billion in the
previous fiscal year. At the end of FY2018, its order backlog was US$46.9 billion, compared to US$51.0
billion at the end of FY2017.
Bechtel operates its business through four business segments, namely, Infrastructure; Mining & Metals
(M&M); Oil, Gas & Chemicals (OG&C); and Nuclear, Security & Environmental (NS&E). The company’s
Infrastructure segment provides engineering, procurement, and construction (EPC) and project
management and consultancy services for various heavy infrastructure projects globally. The segment also
offers a range of services comprising feasibility studies, master planning, sustainability planning and
development, environmental assessments, design, project management, construction management, testing
and commissioning, and risk management. It executes projects for rail systems, roads, bridges, aviation
facilities, power plants, and communications networks. It also develops, manages and constructs airports,
rail and highway systems, besides office buildings, theme parks and resorts. The company also carries out
public-private partnership projects for government and private sector clients. Under the civil sector, the
company carries out the reconstruction of existing systems, earthquake retrofitting, tunnel sections, material
and foundation studies and traffic engineering. For the Rail sector, the segment executes the construction
of high-speed rail systems; mass transit and light-rail systems; surface, underground and elevated
structures; stations, terminals, and platforms; Buildings, bridges, and tunnels; maintenance facilities, yards,
and terminals; signaling, communication, and electrification systems; operations and systems analysis; and
Testing and commissioning. Bechtel provides end-to-end deployment services including program
management, network planning and RF design, engineering, procurement, site acquisition, construction
management, and testing and optimization services in wireless, wireline and other telecommunications
facilities under communications sector.

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Since its inception, it has completed 96 airports and airport systems, more than 17,400 miles of installed
wireline and fiber communications cable, over 17,200 miles of highways and roads, 50 hydroelectric power
plants, over 80 ports and harbors, more than 6,200 miles of railroads, 250 miles of tunnels, 300 subway
and railway projects, and 390 individual power plant projects. Major projects of the segment include
Edmonton Valley Line Light Rail Transit, Athens Metro, Toronto-York Spadina Subway Extension, London
City Airport, Keeyask Generating Station, Western Sydney Airport, Crossrail, Dulles Corridor Metrorail
Extension, Hummel Station Power Plant, Gatwick International Airport, Kosovo Motorway, Muscat
International Airport, and Riyadh Metro.
The M&M segment of the company worked on hundreds of mining and metals projects, and conducted
more than 1,000 studies on six continents. It has substantial experience in mineral exploration and geology,
hydrometallurgical processing, mine planning, pyrometallurgical processing, material handling, metal
forming, mineral processing, pollution control, electrometallurgy and environmental permitting. This
segment serves ferrous and non-ferrous metal markets focusing on copper, gold, iron ore and steel,
aluminum and alumina, nickel, and titanium; industrial minerals with focus on cement, glass, and gypsum;
and metal forming and finishing, in particular aluminum and steel. The company’s projects enabled
customers to produce 200 million metric tons of installed iron ore per annum. It also executed 44 major
copper projects; 30 aluminum smelter projects; 15 coal projects and eight alumina refinery projects. Key
projects include Alba Line 6 Expansion Project, Al Taweelah Alumina Refinery, Ras Al Khair aluminum
smelter project, Los Bronces mine development project, Fjardaal aluminum smelter project and Quebrada
Blanca Phase 2.
Through the OG&C segment, the company focuses on construction and other associated services for
chemical, petrochemical and LNG industries. Its service portfolio includes site development, process
design, project management, and engineering, procurement, construction, and start-up for LNG liquefaction
plants, LNG regasification terminals, LNG peak-shaving and transportation facilities, pipelines, offshore and
onshore facilities, and storage tanks. The company has built more than 380 petrochemical and chemical
projects, including grassroots refineries; more than 52,800 miles of pipeline systems; 50 major oil and gas
field developments; 275 refinery expansions and modernizations; and 110 gas processing plants. Bechtel
also handles refinery expansion and modernization projects; and undertakes gas processing plant, and
major oil and gas field development projects. Key projects include Beaumont Scanfining Refinery Upgrade,
Corpus Christi Liquefaction, Liwan 3-1 offshore development project, Jamnagar refinery project, Sabine
Pass Liquefaction, Nanhai Petrochemical Complex, PTTGC Petrochemical Complex, Ruwais refinery
expansion, Tahrir Petrochemicals Project, and West Nile Delta Gas Processing Terminal.
The NS&E business unit provides design and construction services to both renewable and non-renewable
sectors. The company is one of the leading design and construction companies for fossil and nuclear-fueled
power plants. Under fossil fuel powered plant sector, Bechtel undertakes projects ranging from combustion
turbine facilities to solid fuel and integrated gasification combined-cycle (IGCC) plants. The company
completed more than 400 facilities in the industry.
For nuclear fueled power plants, the company offers a comprehensive selection of services, including plant
recovery support, plant license renewal, steam generator replacement, and new nuclear generation. The
renewable power business offers services across solar thermal and photovoltaic, wind, carbon capture and
sequestration and desalination market sectors. The segment’s key projects comprise Lawrence Livermore
National Laboratory, Hanford Waste Treatment and Immobilization Plant, Pueblo Chemical
AgentDestruction Pilot Plant, Uranium Processing Facility, Savannah River Remediation, Arnold
Engineering Development Complex, and Horizon Wylfa Newydd Nuclear Power Plant. The company
provides a range of services to various departments and agencies of the US government. Its services
offering to government agencies include environmental cleanup and restoration at former nuclear weapon
production sites; designing, constructing, and operating complex, first-of-a-kind facilities to treat radioactive
waste safely or eliminate obsolete chemical weapons; engineering, construction and logistics services for
defense and homeland security; operating premier national laboratories to maintain the safety, security, and
reliability of the US nuclear weapons stockpile, and to promote scientific research; manage and operate

MLIP3038-0018
laboratories and provide design and procurement management services to support the US navy nuclear
submarine and aircraft carrier fleet; providing engineering and construction management expertise to help
combat bio-terrorism and support the demilitarization of biological weapons facilities in allies of the US. The
company also manages and operates two national laboratories in Livermore, California and Los Alamos,
New Mexico, and atomic power laboratories in Pennsylvania and New York.
Bechtel Corp
Table 5: Bechtel Corp: key facts
DetailType Detail
Head office: 12011 Sunset Hills RoadReston, Virginia, United
States
Number of Employees: 50000
Website: www.bechtel.com
Financial year-end: December
Source: COMPANY WEBSITE
Lennar Corp
Company Overview
Lennar Corp (Lennar) is a homebuilder that constructs and sells single-family attached and detached
homes. The company also offers real estate related financial services including mortgage financing, title
insurance and closing services. Lennar carries out the purchase, development and sale of residential land.
It develops and constructs multifamily rental properties through its subsidiaries. As of November 2018, the
company owned 201,648 homesites and had access to an additional 68,623 homesites through option
contracts. The company operates its businesses in several US states such as Florida, North Carolina, New
Jersey, Georgia, Maryland, South Carolina, Arizona, Colorado, California, Nevada, Illinois, Minnesota,
Oregon, Tennessee and Washington. Lennar is headquartered in Miami, Florida, the US.The company
reported revenues of (US Dollars) US$20,571.6 million for the fiscal year ended November 2018 (FY2018),
an increase of 62.7% over FY2017. In FY2018, the company’s operating margin was 11%, compared to an
operating margin of 9.4% in FY2017. In FY2018, the company recorded a net margin of 8.2%, compared to
a net margin of 6.4% in FY2017.
The company reported revenues of US$5,562.9 million for the second quarter ended May 2019, an
increase of 43.8% over the previous quarter.
Lennar Corp (Lennar) carries out homebuilding and real estate related financial services businesses. The
company's homebuilding operations include construction and sale of single-family attached and detached
homes. It also purchases, develops and sells residential land.
The company operates through eight reportable business segments: Homebuilding East, Homebuilding
West, Homebuilding Central, Homebuilding Texas, Homebuilding Other, Lennar Financial Services, Lennar
Multifamily, and Rialto Investments.
As of November 2018, the company had total backlog of US$6,600 million, as compared to US$3,600
million as of November 2017.

MLIP3038-0018
As of November 2018, the company owned 201,648 homesites and had access to an additional 68,623
homesites through option contracts. During FY2018, the company delivered 45,627 homes, as compared to
29,394 homes in FY2017.
Lennar Corp
Table 6: Lennar Corp: key facts
DetailType Detail
Head office: Suite 400700 NW 107th Avenue, Miami, Florida,
United States
Telephone: 13055594000
Fax: 13026555049
Website: www.lennar.com
Financial year-end: November
Ticker: LEN
Stock exchange: New York Stock Exchange
China State Construction Engineering Corp Ltd
Company Overview
China State Construction Engineering Corp Ltd (CSCEC) is a provider of construction contracting and real
estate services. It offers a range of services such as engineering; building construction and contracting;
urban development; real estate development and investment; infrastructure construction and investment;
project management; design and survey; and equipment manufacturing. CSCEC executes various projects
such as construction of roads, municipal utilities, housing units, ports and waterways, railways, airports,
bridges, water conservancy, hydropower, mining, metallurgy and petrochemical plants. It also provides
construction financing services. The company has operations in Asia-Pacific, the Middle East, Africa,
Europe and North America. CSCEC is headquartered in Beijing, China.The company reported revenues of
(Renminbi) CNY1,199,324.5 million for the fiscal year ended December 2018 (FY2018), an increase of
13.8% over FY2017. In FY2018, the company’s operating margin was 6%, compared to an operating
margin of 5.7% in FY2017. In FY2018, the company recorded a net margin of 3.2%, compared to a net
margin of 3.1% in FY2017.
Company Overview
Company Overview
The company reported revenues of CNY297,576.8 million for the first quarter ended March 2019, a
decrease of 17.1% over the previous quarter.

MLIP3038-0018
China State Construction Engineering Corp Ltd (CSCEC) is one of the largest construction contractors in
the world. It carries out public construction works, construction of airports, office buildings, hotels, sports
facilities, educational institutions, housing facilities, industrial complexes, and healthcare facilities. The
company has operations in 100 countries and undertakes projects in various regions such as Africa, Asia,
the Americas and the Middle and Europe.
As of December 31, 2018, the company secured new contracts worth CNY2,627.1 billion, compared to
CNY 2,224.9 billion in FY2017. The company classifies its operations into five segments: Building
Construction; Infrastructure Construction and Investment; Real Estate Development and Investment;
Design and Survey; and Others.
China State Construction Engineering Corp Ltd
Table 7: China State Construction Engineering Corp Ltd: key facts
DetailType Detail
Head office: No.15 Sanlihe Road, Haidian District, Beijing ,
Beijing, China
Website: www.cscec.com
Ticker: 601668
Stock exchange: Shanghai Stock Exchange
Vinci SA
Company Overview
Vinci SA (Vinci) is an integrated construction and concessions company. It carries out the design,
construction and management of infrastructure and facilities globally. The company’s portfolio of services
includes infrastructure development, civil and hydraulic engineering, upstream design and coordination,
consultancy, and maintenance and technical support services for transport infrastructure and public
facilities. The company carries out transport systems, public and private buildings, energy, airport and
urban development, and water, energy and communication network projects. Vinci is also involved in
transport infrastructure concession operations in the motorway, rail, airport, bridge and tunnel, stadium and
parking facility sectors. It operates through business units and has presence across Europe, the Americas,
Africa, Asia and the Middle East. Vinci is headquartered in Paris, France.The company reported revenues
of (Euro) EUR44,152 million for the fiscal year ended December 2018 (FY2018), an increase of 8% over
FY2017. In FY2018, the company’s operating margin was 11.1%, compared to an operating margin of
11.1% in FY2017. In FY2018, the company recorded a net margin of 6.8%, compared to a net margin of
6.7% in FY2017.
Vinci SA (Vinci) is an integrated construction and engineering company. It designs, builds, finances and
manages facilities and infrastructure such as transport systems, public and private buildings and urban
developments, and water, energy and communication networks.

MLIP3038-0018
The company classifies its operations into three segments: Concessions, Contracting, and Immobilier and
Holding Companies.
Vinci operates through 3,200 business units in 100 countries across Europe, the Americas, Africa, Asia and
the Middle East.
Vinci SA
Table 8: Vinci SA: key facts
DetailType Detail
Telephone: 33147163500
Fax: 33147519102
Website: www.vinci.com/
Ticker: DG
Stock exchange: Euronext Paris
Ferrovial, S.A.
Company Overview
Ferrovial S.A. (Ferrovial or "the company") is a provider of infrastructure and municipal services. It offers
commercial and residential construction, infrastructure, airport management and toll road services. The
company carries out building refurbishment; civil engineering; nonresidential, residential and industrial
construction projects for private and public sector clients. It also carries out other businesses that include
urban and environmental services; airports investment and operation; infrastructure and facilities
maintenance; and toll road operations. Ferrovial has business operations across Europe, the Americas, and
Asia Pacific. The company is headquartered in Madrid, Spain.The company reported revenues of (Euro)
EUR5,737 million for the fiscal year ended December 2018 (FY2018), an increase of 11.4% over FY2017.
In FY2018, the company’s operating margin was 7.6%, compared to an operating margin of 9.5% in
FY2017. The net loss of the company was EUR447 million in FY2018, compared to a net profit of EUR453
million in FY2017.
Company Overview
Company Overview
The company reported revenues of EUR1,229.0 million for the first quarter ended March 2019, a decrease
of 78.6% over the previous quarter.
Ferrovial S.A. (Ferrovial or "the company") is an infrastructure operator and a municipal services company.
The company's offerings include municipal and environmental services, infrastructure maintenance, waste
recycling and civil engineering. The company operates in more than 15 countries.

MLIP3038-0018
The company operates through five segments: Toll Roads, Construction, Airports, Services and Others.
The company's Services segment provides a range of services broadly distributed into local authorities,
infrastructures (facility management), and urban and industrial waste management through its subsidiaries.
The company assists local councils to provide sustainable services to their citizens, in the area of local
authorities. The company's facility management services are provided in the areas of energy efficiency,
facility maintenance, road preservation, air traffic and auxiliary services. The segment's auxiliary services
include managing sports centers, medical transport and customer service centers. The company's urban
and industrial waste management services include collection, treatment, recycling and recovery of waste. In
addition, the segment offers industrial services such as the transfer of waste or cleaning confined spaces.
The business operates through subsidiaries including Amey, Cespa and Ferroser. The company's offerings
in the UK, include the maintenance of highway and railway infrastructures, integral waste management.
The segment's international business offers a range of infrastructure services for urban infrastructure,
transport infrastructure, environmental infrastructure, social infrastructure and industrial infrastructure. In
Chile, the company operates through Steel Ferrovial Servicios, which provides services for mining.
Ferrovial operates through FBSerwis in Poland, a joint venture with Budimex. In Qatar, Ferrovial provides
facility management services at the new Doha Airport. In Portugal, the company provides waste
management services. The company discontinued the service segment in February 2019.
Ferrovial's Construction segment operates through its subsidiary, Ferrovial Agroman. The company designs
and builds singular constructions, including civil engineering to buildings and large transport infrastructure.
The company operates a number of subsidiaries, including Cadagua, Budimex and Webber. Cadagua is
engaged in engineering and in the construction of water treatment plants. Budimex is involved in end-to-
end projects in the areas of civil engineering, building, industrial construction and real estate development
in Poland. Webber carries out road constructions in Texas and is specialized in civil engineering
infrastructure construction. It is one of the leading players in recycled aggregate production. The company
operates through local offices in various countries including Portugal, France, the UK, Ireland, the US,
Canada, Colombia, Peru, Brazil, Chile, Puerto Rico, Australia and New Zealand. The business also has
extensive presence in the Middle East region. In FY2018, the Construction segment reported revenue of
EUR4,638 million, which accounted for 88.3% of the company's revenue.
The company's Toll Roads segment operates through the Cintra subsidiary which is engaged in the
development of private sector transportation infrastructure. It manages 26 concessions extending over
more than 2,072 kilometers across Canada, the US, Spain, the UK, Portugal, Ireland, Slovakia, Greece,
Colombia and Australia. In FY2018, the Toll Roads segment reported revenue of EUR470 million, which
accounted for 8.9% of the company's revenue.
Ferrovial's Airport segment's activities include direct investment in infrastructure to the management of
operations. Ferrovial holds a 25% stake in Heathrow Airport Holdings HAH, Europe's biggest hub and one
of busiest airports anywhere in the world. It also operates the unregulated airports of Aberdeen, Glasgow
and Southampton (AGS), in which Ferrovial is an industrial partner with a 50% stake. In addition,
FerroNATS, a partnership between Ferrovial Servicios and NATS, an air navigation service provider
provides air control services in different control towers of several Spanish airports, including Alicante,
Valencia, Ibiza, Sevilla, Jerez, Sabadell, Cuatro Vientos, Vigo and La Coruna. In FY2018, the Airports
segment reported revenues of EUR14 million, which accounted for 0.3% of the company's revenue.
The Other segment includes airports and toll roads, corporate business and real estate business
operations. In FY2018, the Others segment reported revenue of EUR132 million, which accounted for 2.5%
of the company's revenue.

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Geographically, the company classifies its operations into seven segments: the UK, Spain, the US, Poland,
Canada, Australia, other. In FY2018, Poland accounted for 30.2% of the company's revenue, followed by
the US (29.3%), Spain (17.6%); the UK (5.9%), Australia (4.7%), Canada (1.1%), and Other (11.2%).
Ferrovial, S.A.
Table 9: Ferrovial, S.A.: key facts
DetailType Detail
Head office: Principe de Vergara 135, Madrid, Madrid , Spain
Website: www.ferrovial.com
Ticker: FER
Stock exchange: Mercado Continuo Espana

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Macroeconomic Indicators
Macroeconomic Indicators
Country data
Table 10: Global size of population (million), 2014–18
Year Population (million) % Growth

2014 318.9 0.8%
2015 321.4 0.8%
2016 323.8 0.8%
2017 326.3 0.8%
2018 328.9 0.8%
Source: MARKETLINE
Table 11: Global gdp (constant 2005 prices, $ billion), 2014–18
Year Constant 2005 Prices, $ billion % Growth

2014 14,799.6 2.4%
2015 15,276.3 3.2%
2016 15,739.0 3.0%
2017 16,161.3 2.7%
2018 16,559.0 2.5%
Source: MARKETLINE
Table 12: Global gdp (current prices, $ billion), 2014–18
Year Current Prices, $ billion % Growth

2014 17,420.2 3.9%
2015 18,313.5 5.1%
2016 19,223.8 5.0%
2017 20,145.1 4.8%
2018 21,077.3 4.6%
Source: MARKETLINE

MLIP3038-0018
Table 13: Global inflation, 2014–18
Year Inflation Rate (%)

2014 1.8%
2015 2.0%
2016 2.1%
2017 2.3%
2018 2.3%
Source: MARKETLINE
Table 14: Global consumer price index (absolute), 2014–18
Year Consumer Price Index (2005 = 100)

2014 121.5
2015 123.9
2016 126.4
2017 129.3
2018 132.2
Source: MARKETLINE
Table 15: Global exchange rate, 2014–18
Year Exchange rate (€/$)

2014 1.3290
2015 1.1095
2016 1.1068
2017 1.1320
2018 1.1810
Source: MARKETLINE

MLIP3038-0018
Appendix
Methodology
MarketLine Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed,
cross-checked and presented in a consistent and accessible style.
Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and
supported by analysis from industry experts using highly complex modeling & forecasting tools,
MarketLine’s in-house databases provide the foundation for all related industry profiles
Preparatory research – We also maintain extensive in-house databases of news, analyst commentary,
company profiles and macroeconomic & demographic information, which enable our researchers to build
an accurate market overview
Definitions – Market definitions are standardized to allow comparison from country to country. The
parameters of each definition are carefully reviewed at the start of the research process to ensure they
match the requirements of both the market and our clients
Extensive secondary research activities ensure we are always fully up-to-date with the latest industry
events and trends
MarketLine aggregates and analyzes a number of secondary information sources, including:
- National/Governmental statistics
- International data (official international sources)
- National and International trade associations
- Broker and analyst reports
- Company Annual Reports
- Business information libraries and databases
Modeling & forecasting tools – MarketLine has developed powerful tools that allow quantitative and
qualitative data to be combined with related macroeconomic and demographic drivers to create market
models and forecasts, which can then be refined according to specific competitive, regulatory and demand-
related factors
Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date

MLIP3038-0018
Industry associations
National Association of Home Builders
1201 15th Street, NW, Washington, DC 20005, USA
1 202 266 8200
www.nahb.org
FIEC - European Construction Industry Federation

Avenue Louise 225, B- 1050 Brussels, BEL
32 2 514 55 35
32 2 511 02 76
www.fiec.org
IFAWPCA, International Federation of Asia and Western Pacific Contractors' Association

3rd Floor Padilla Building, Emerald Avenue, Ortigas Center, Pasig City, Metro Manila, PHL
632 631 2782
632 631 2773
www.ifawpca.org
Related MarketLine research

Construction in Germany
Construction in Europe
Construction in Asia-Pacific
Construction in the United States
Construction in China

MLIP3038-0018

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Global - Construction

REFERENCE CODE: MLIP3038-0018

EMISPDF us-eyintranet from 36.72.213.51 on 2020-07-21 07:37:17 BST. DownloadPDF.

Market value forecast

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Table 1: Global construction industry value: $ billion, 2014–18

Year $ billion € billion % Growth

Figure 1: Global construction industry value: $ billion, 2014–18

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Table 2: Global construction industry category segmentation: $ billion, 2018

Figure 2: Global construction industry category segmentation: % share, by value, 2018

United States accounts for a further 31.4% of the global industry.

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Figure 3: Global construction industry geography segmentation: % share, by value, 2018

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Table 4: Global construction industry value forecast: $ billion, 2018–23

Year $ billion € billion % Growth

Figure 4: Global construction industry value forecast: $ billion, 2018–23

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Five Forces Analysis

Figure 5: Forces driving competition in the global construction industry, 2018

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Figure 6: Drivers of buyer power in the global construction industry, 2018

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Figure 7: Drivers of supplier power in the global construction industry, 2018

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Table 5: Bechtel Corp: key facts

Source: COMPANY WEBSITE

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Table 6: Lennar Corp: key facts

Source: COMPANY WEBSITE

China State Construction Engineering Corp Ltd

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China State Construction Engineering Corp Ltd

Table 7: China State Construction Engineering Corp Ltd: key facts

Source: COMPANY WEBSITE

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Table 8: Vinci SA: key facts

Source: COMPANY WEBSITE

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Table 9: Ferrovial, S.A.: key facts

Source: COMPANY WEBSITE

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Table 10: Global size of population (million), 2014–18

Year Population (million) % Growth

Table 11: Global gdp (constant 2005 prices, $ billion), 2014–18

Year Constant 2005 Prices, $ billion % Growth

Table 12: Global gdp (current prices, $ billion), 2014–18

Year Current Prices, $ billion % Growth