Transcript What is important for your own situation?

Economic review & forecasts
Chris Sleight
Editor
International Construction
Contents
 Global economic trends
 Construction industry trends – global and US
 Trends & cycles in the crane industry
 Trends in the heavy transport sector
 Outlook based on economic forecasts
Warning
 Economic forecasts always have uncertainty
 We live in very uncertain times
 If any forecast today turns out to be accurate it is pure luck
 But forecasts have a value
 Show broad trends
 Summarise complex situations
 Form your own opinion!
 What is important for your own situation?
World economic growth 2011
CIS 4.6%
US 1.5%
JP -0.5%
EU 1.7%
RoA 8.2%
LAm 4.5%
ME/NA
4.0%
World 4.0%
S. AF 5.2%
World economic growth 2012
CIS 4.4%
US 1.8%
JP 2.3%
EU ??
RoA 8.0%
LAm 4.0%
ME/NA
3.6%
World 3.5%
S. AF 5.8%
World economic growth 2016
CIS 4.2%
US 3.4%
JP 1.3%
EU 2.1%
RoA 8.6%
LAm 3.9%
ME/NA
5.1%
World 4.9%
S. AF 5.1%
GDP trends
 Continued strong growth in emerging markets
 Developing Asia continues to lead growth
 Low growth across developed countries
 Shift of economic power to Asia
GDP trends & construction
 Growth in construction is in line with GDP growth
 Construction output ~ 10% of GDP
 GDP data indicates size & trend of construction market
 GDP & construction are key drivers for lifting &
transportation industries
Global construction market
CIS, 2%
Latin America,
6%
ME & AF, 2%
Europe, 24%
US & Canada,
13%
Total output 2010
~ US$ 7.5 trillion
Asia, 25%
Global construction markets: growth trends
10%
5%
0%
2007
2008
2009
2010
2011
2012
-5%
-10%
-15%
Asia
ME & AF
N. America
S. America
W. Europe
World
Global Construction outlook
Europe:
Return to recession
North America:
Flat or low growth
Japan:
Growth. Possible reconstruction boom
Developing Asia:
Strong growth – circa +10%. Inflation concerns
Latin America:
Strong growth – circa +5%. Inflation concerns
ME/AF:
Generally strong, although mixed by region
US construction output – US$ billion
1400
1200
1000
800
600
400
200
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
US Construction output – US$ billion
1400
1200
1000
800
600
400
200
0
2002
2003
Total
2004
2005
Res
2006
Non-Res
2007
2008
Public
2009
2010
Private
2011
US housing starts - million
2.5
2.0
1.5
1.0
0.5
0.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011*
Crane industry trends
Manufacturers’ revenues & profitability
Stock market performance of crane manufacturers
Fleet sizes
Relation to wider economic trends
Quarterly sales ($ million) –
‘traditional’ crane manufacturers
4000
3500
3000
2500
2000
1500
1000
500
0
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11
Operating margin selected ‘traditional’ crane manufacturers
16%
14%
12%
10%
8%
6%
4%
2%
0%
Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11
-2%
-4%
Stock market performance – year to date
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
All crane manufacturers
'Traditional' suppliers
Dow
Manufacturers - conflicting indicators
Revenues & profitability recovering in 2011
- Revenues +12.5% year-on-year
- Margin ~4% - best for 2+ years
Share prices down ~40% in 2011
- Stock markets reflect future earnings expectations
- Impact from faltering recovery
- Impact from political/economic uncertainty
- High impact due to status as a ‘cyclical’ industry
IC&ST IC50 – Global mobile crane fleet size
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
1997
1998
1999
North America
2000
2001
2002
Europe
2003
2004
2005
2006
Asia Pacific
2007
2008
2009
ROW
2010
2011
North American mobile crane fleet size
12000
10000
8000
6000
4000
2000
0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
US fleet size & construction - % change
20%
15%
10%
5%
0%
2003
2004
2005
2006
2007
2008
-5%
-10%
-15%
-20%
-25%
Mobile crane fleet
Construction
2009
2010
2011
Correlation to non-residential construction
20%
15%
10%
5%
0%
2003
2004
2005
2006
2007
2008
-5%
-10%
-15%
-20%
-25%
Non-Res
Mobile crane fleet size
2009
2010
2011
Cranes vs economic cycle
General health improving
Clear 1-2 year lag between construction growth and crane fleet growth
Close correlation to non-residential construction activity
- Similar magnitude of growth
Modest construction growth this year  modest fleet growth in 2012
Stronger recovery in 2012 (?)  stronger fleet growth in 2013
Heavy transport
Trends in specialized heavy transport
Road transportation & fuel prices
IC&ST Transport 50 – global capacity (t)
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2009
North America
2010
Europe
2011
Asia Pacific
ROW
Transport 50 – North American capacity (t)
600,000
500,000
400,000
300,000
200,000
100,000
0
2009
2010
2011
US truck registrations
10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Historic US retail diesel prices - $/gal
$4.00
$3.50
$3.00
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Oil price - $/barrel (WTI)
120
100
80
60
40
20
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Heavy transport costs
Direct correlation between oil price & diesel price
Outlook for oil price:
– Remaining high, despite Euro-zone issues
– Many expect tail-off in 2012 – Q2 onwards
Range of forecasts for 2012 – US$ 80/barrel – US$ 110/barrel
Equates to US$ 3.05 – US$ 4.00 per gallon of diesel
Heavy transport trends
+17% increase in heavy transport capacity in 2011
Cyclical correlation to economic activity
US trailer-focussed market (75% trailers vs 25% modular)
(Europe 15:85, World: 45:55)
Truck sales recovering
Diesel prices to remain above US$ 3.00/gallon
Outlook for sector
Return to health in 2011 should continue in 2012
Costs remain at current levels
US non-residential construction:
Low growth ~3% - correlation to cranes market
World:
Major opportunities in Asia & Latin America
Opportunities with more risk in MENA
Non-residential construction ~65% of total output worldwide
Uncertainty
Euro-zone, North Africa, US budgetary paralysis
Further information
www.khl.com
E-mail:
Direct tel:
[email protected]
+44 (0)1892 786205