E&C Outlook: Government Gives, Competition Burns
The engineering and construction industry survived 2009 in fine shape, but the future is murkier.
Contrary to what might be expected for a sector leveraged to the capital spending and fixed asset investment cycle, the engineering and construction (E&C) industry survived the recession generally in fine shape.
For many companies, falling input costs, a slack labor pool, and good project management allowed margins to expand in 2009 for previously signed contracts. This, when combined with some working capital reductions, produced very strong free cash flows at previously indebted companies like AECOM and URS, strengthening their balance sheets considerably. These companies are now on the prowl for more acquisitions to expand their areas of expertise or geographical reach.
Michael Tian does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.