iC Top 200 - The world's largest construction companies 2007

19 March 2008

This year the top four companies in iC's league table of the world's largest construction companies are unchanged from the 2006 edition. France's two giants, Vinci and Bouygues, sit atop the ranking followed by US-based Bechtel and Germany's Hochtief.

But that is not to say that there has been little change across the top 200 – quite the reverse in fact. Of the 200 construction companies listed, only nine occupy the same positions they did last year, and four of these are Vinci, Bouygues, Bechtel and Hochtief.

There are 13 new companies listed in this year's top 200, which is based on sales revenues in 2006. The highest of these is US-based Meritage Homes, which is ranked at no. 88.

In addition to these, 74 companies moved up the rankings to improve on their placing last year, while 104 have moved down.

The biggest climber is US-based McDermott International, which jumped a huge +55 places to no. 75 this year, compared to 130 in the 2006 edition of the top 200. The main reason for this is that the company's power generation business, Babcock and Wilcox, had been in Chapter 11 bankruptcy protection for several years up to February 2006, and its results were not included in previous financial statements. Its inclusion in the 2006 results was the main reason for McDermott's sharp rise.

Other steep risers near the top of the table include a trio of Chinese contractors, China Railway Engineering Corporation (+12), CSCEC (+8) and China Communications Construction Group (+18). The first two companies have risen up the table due to organic growth, however, China Communications position is due to its formation from the merger of two already big contractors, China Road & Bridge and China Harbour Engineering.

Also worth a mention is Germany's Strabag, which has risen +25 places to no. 22 this year following its acquisition of parts of the collapsed Walter Bau group.

Vital statistics

This year's rankings were based on financial results for 2006, and total revenues for the top 200 construction companies came to US$ 992 billion. This was a +16% increase on the total of US$ 854 billion for last year's top 200, putting the average revenues for a top 200 company at US$ 4.96 billion in 2006.

As an aside, it is interesting to reflect that the world construction market is worth about US$ 4000 billion, so the 200 companies listed in iC's league table account for about a quarter of all global construction activity.

The average operating margin for a top 200 company is 6.03%, and the average company size in terms of staff numbers is 17855 people. Although not all companies listed in the top 200 report staffing levels, this figure implies that total employment among the group is 3.57 million people.

These statistics tell part of the story, but there are of course big differences between construction companies in different parts of the world. Although containing representatives from 30 countries, contractors from ten countries – the US, Japan, France, China, UK, Spain, Germany, South Korea, The Netherlands and Sweden – account for 89% of the top 200's revenues. Even among this group, profit margins vary wildly from 2.86% for Japanese companies to 10.10% for Spain's construction contractors.

Even more stark are differences in company size – an average of US$ 3.2 billion per year for Dutch construction companies to US$ 12.5 billion for French ones – and headcount – just 2801 people per South Korean contractor compared to a massive 123992 for Chinese companies.

Good health

Overall, the statistics from this year's top 200 league table paint a picture of an industry in good health. Sales and profits have risen compared to last year, and the entry level to the top 200 has also risen. In 2006 the company in position no. 200 had sales of US$ 919 million. This year the last placed company had sales of US$ 1.15 billion.

Having said that, there are still some areas of concern. Profitability is still weak in some major markets including Japan and Germany, although it is better than last year.

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