At first glance, the lines of the graph below that display the performance of the demolition industry during 2014 might lead you to believe that times have been very tough for the sector globally, with the overall total of the 2015 d&ri100 falling by 11.7%, at just over US$5.3 billion, from the corresponding figure of just in excess of US$6 billion last year. The data would also suggest that it is European contractors who have borne the brunt of the downturn, with this region’s total falling by almost 45% to US$2.06 billion from US$3.77 billion as published last year.
Readers might recall that in last year’s report on the table, I perhaps over-confidently predicted that the US$6 billion barrier would again be more than comfortably passed this year – such is the danger of committing oneself in print!
However, one reason behind the fall is that this year we have been much more restrictive in listing companies in the d&ri100. Rightly or wrongly, for historical reasons several large European companies had been included in the list from the very beginning whose core activities were not restricted to carrying out demolition work, thus inflating the total somewhat. This year, we have made the decision to only include those companies who we are able to confirm operate with demolition and associated remediation activities at the very heart of their being.
To illustrate the impact this has had, when looking at the data from 2014, excluding those who no longer feature on the list for the above reason would have seen a European contribution of US$3.22 billion against the published figure, i.e. a reduction of US$0.55 billion. Having made this calculation, the overall fall of the d&ri100 is much less dramatic than at first glance – a decline of just 2.84% or US$155.9 million.
Nevertheless, it does have to be said that times do indeed seem to have been difficult for the industry in Europe irrespective of the above. Even using the revised total, the data for the industry in this region indicates a downturn in turnover of 37% against 2014 – no small decline by anybody’s standards. In contrast, the industry in the Americas obviously had a much improved year, with an increase in earnings during 2014 against 2013 of 16.8% or US$291.16 million.
Forty-two of the contractors in the list are reported as seeing a decline in earnings over the course of 2014, and in some instances these are somewhat eye-watering, such as Occamat’s 75% drop to US$26 from US%101 million the year before and AF Decom’s 55.3% fall to US$108.60 million from US$243 million. Of course, the latter’s fortunes may well have been impacted by the effect that low oil prices are having on plans made, and then put on hold, by the offshore oil and gas industry.
In addition, several leading contractors last year have fallen out of the main list altogether, such as Russia’s Razz-Max (32 in the list), who was new in 2014. D&Ri is not in a position to say whether this is the result of difficult market conditions or simply our inability to obtain the relevant numbers, but in all probability the latter cause is the more likely.
Another negative is that in our 2014 report, 19 of the contractors that appeared in the d&ri100 reported earnings in excess of US$100 million but this year, that number has fallen to 14, a decline of 23.3%. This more than suggests that 2014 was a challenging year for all, but it nevertheless appears that size does matter where the demolition industry is concerned – only two of the top 10 report reduced earnings in 2014 and 21 do so in the top 50, leaving 22 to report growth (given there are seven new entries in this half of the table). And the top 10 are perhaps the most international in recent years, with contractors from the USA, UK, Germany and Belgium making up the top of the list. Irrespective of its troubles in Central London, Keltbray has jumped from 6 to 2 this year, piping Brandenburg, who also climbs a place. The biggest movers in the 10 are, however, D H Griffin Wrecking who jumps from 17 to the slot occupied by Keltbray last year, and Houston based-Cherry, who climbs to 9 from its previous 21 position.
In the bottom 50, just 17 contractors saw evidence of an increase in earnings from 2013 to 2014. In summary, 42 of the contractors in the list saw a drop in earnings during 2014, which hardly indicates a healthy industry.
And the data does confirm that while there may be recovery prospects ahead, it is regional. All three Italian contractors in the list show reduced revenues and we have been unable to source any data for a fourth who was previously listed, CM Cantieri Moderni, so it disappears entirely, and of the five Dutch contractors listed, just Boverhoff saw a modest growth. Meanwhile, of the 12 German companies that feature, just five saw a decline, and of 33 UK contractors listed, just 12 saw falling revenues.
In North America, two Canadian contractors are listed and experienced mixed fortunes, with Priestly seeing growth and Quantum Murray seeing a downturn. Meanwhile, 23 US contractors appear and just eight of these see a drop in earnings, and again it is those down the pecking order that seem to have undergone this experience.
Despite the above, the turnover of the company in 100th place in the list has actually fractionally increased against last year’s US$13.70 million, with the UK's Hughes & Salvidge holding that position on a reported turnover of US13.88 million.
On the up
In this year’s listing, as indicated above, a minority (39) of contractors saw growth during 2014. In many cases, this was relatively small, but one star did emerge in Brazilian contractor Fabio Bruno, who saw revenue increase by 247% to US$50.71 and who made the biggest leap up the table from position 73 to 29.
Taken together, the growth seen by these well-performing contractors has been unable to counteract the negative effects of the results from their less fortunate fellows, and results in the d&ri100 showing a major fall that has been exacerbated by our repositioning of the listing.
Nevertheless, the fact remains that the d&ri100 total still exceeds the highpoint in 2008 before the effects of the credit crunch fully kicked in and caused the global financial crisis that had such an impact of the world’s construction industry. Only the European industry appears to have fallen below this benchmark, with 2008 seeing a total revenue of US$2.4 billion for those listed in these region, some US$300 million more than the corresponding figure for this year.
A total of 21 names are new to the list this year or have returned after varying length absences. Top of the pile is of course NorthStar Group, which is the result of the merger of LVI and NCM Group reported on in a past issue.
At that time, D&Ri did suggest that the combined reported turnovers of the two companies would likely make it the world’s largest single demolition and remediation contractor, and the numbers this year do appear to bear this out.
A number of the others return as part of another initiative undertaken this year. We have always been aware that the Japanese demolition industry has been under-reported in recent years. Language issues and the difficulty in obtaining the necessary figures were the cause of this. This year, we were determined that a major effort be made to correct this situation, and the result of these efforts sees a total of seven Japanese contractors return to the main list, with a further three appearing just outside.
This has also had the natural effect of substantially increasing the share that ‘Rest of the World’ contractors’ occupy of the d&ri100 ‘pie’ to 23.5% from last year’s somewhat paltry 8.5%. Indeed, for the first time in the listing’s history, the ‘Rest of the World’ total comfortably passes the US$1 billion mark. I am confident that this more accurately reflects the scale of the industry outside the Americas and Europe, and efforts will be maintained to ensure that this remains the case in future years.
To view the various tables that constitute the D&Ri100, please click on the links below:
Download: D&Ri 100 Table