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A quick glance at the charts below shows that trends in FY08 have been positive for the majority of companies across EBIT growth, revenue growth and order book growth. But who are the winners?
First place to infrastructure
Over the last 12 months, Infrastructure has, as a sub-sector, performed above average in terms of revenue growth, EBIT growth and order book growth.
Enterprise, Babcock and Spice have been the stand out companies in a high performing pack.
Can I take your order?
It may surprise some to learn that there has been growth in order books across all sub-sectors in 2008. In our Business Services sub-sector order book now stands at a multiple of 5.2x revenue and in Facilities Management at 3.4x revenue.
For both Construction and Consulting relatively low order book growth and low order book to revenue multiples points to a difficult 2009. These two sectors have the only companies that have seen order book shrinkage during 2008 (Morgan Sindall and Galliford Try in Construction and Mouchel in Consulting).
Looking ahead
Going forward, brokers forecast overall growth in revenue for all of our sub-sectors except Construction.
Again, Infrastructure has the brightest prospects according to brokers with 13% revenue growth and high teens EBIT growth.
We think that strong growth in order books and organic revenue in 2008 provide the momentum to support these forecasts. Overall, we are more optimistic than the brokers in Construction, based on our discussions with executives. We are however, more pessimistic than the brokers in Consulting.
Further positive dynamics will support growth over the next few years for many of the companies analysed here. Firstly, continued outsourcing. Secondly, continued consolidation, once M&A activity restarts. Thirdly, rationalisation of the supply base by clients looking for more savings - this benefits larger players.
In the next section we look at growth across particular end markets, split by New Build, Capital Works and Maintenance.
Latest year and forecast operating performance
Zoom chartAnna Wilson is an Associate Consultant at Credo.
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