The findings of Environment Analyst’s 2017/18 Global Market Trends Survey - completed by several hundred environmental consultants and business managers across the globe from March to July - indicate a strong positive growth swing for large consultancies last year, while respondents from smaller practices saw a deterioration in performance. It also shows improved growth projections for the North American and Asia-Pacific markets, although overall global sector prospects have been downgraded.
The report - released to subscribers this week - points to a slightly improved average internal year-on-year global environmental consulting (EC) revenue growth rate for 2016 at 3.6% (unweighted), up from 3.1% as indicated by the previous survey for 2015 (Environment Analyst 03-Aug-16). Those representing larger firms (with annual EC revenue in excess of $15m) saw a strong upswing in growth to 5.8% in 2016 from the -0.2% reported the previous year, while those from small firms (<$15m) saw a drop in annual revenue growth to 2.4% from 3.8% (see figure).
This represents a reversal of the trend of the preceding two years when the large players were struggling to achieve organic growth given the sluggish global economy and natural resources sector downturn, while many smaller practices were continuing to thrive. But this year’s Global Market Trends Survey indicates that the momentum has now shifted so that larger firms are more likely to have experienced an improved performance – even if for some that has come more as a result of mitigating actions taken rather than reflecting vastly improved markets.
But there are also more positives to be taken from this year’s survey, including the significantly enhanced future growth prospects anticipated for the Asia-Pacific region as a whole, while the Trump effect has seemingly failed to dent growth expectations for North America.
Other key survey findings include:
- Order books growing or stable for majority with average growth expected at 4.8% in 2017 - with 34% reporting an increased order book going into the next twelve months (up from 19% in the 2016 survey), while a reduced proportion compared to last year - of 19% - reported a contracting forward order books. In 2017, small firms expect to grow by a much improved 4.3% and large firms by a similar level to that in 2016 of 4.4%.
- EC teams are growing again - by an average of 2.4% in 2016 compared to 0.4% as reported in the previous survey. This is being driven by large firms, whose EC staff numbers were up by an average of 3.2% (exclusive of those added through acquisition), while small firms saw a rise of 1.9%. However, recruitment was reported to be frozen by more than half of small firm respondents.
- Pay rises for those in large firms against predominantly flat fees - the bulk of survey respondents indicated that fee trends were static with the average daily fee for a senior consultant reported as $877, rising to over $1K in large firms. However against that, annual pay increases averaged +2.9% for those in large firms while small firm participants saw an average reduction in remuneration equivalent to -1.7%. Unsurprisingly then that the average operating margin was down by 2.3 percentage points to stand at 8.7% in 2016 compared to 2015, with one-third of respondents saying the business was either running at a loss of just breaking even.
- Trump is biggest risk going forward - rated as such by over half (54%) of the respondents surveyed, although one quarter view the latest US president as having a positive impact on market opportunities and the international business climate going forward. Indeed the average compound annual growth (CAGR) projected for their businesses in the North American region as a whole was slightly improved this year at 4.8% for the period 2017-2021.
- Downward rating applied to overall global EC market prospects - with the projected average CAGR standing at 5.4% for the next five years, down from the 7.5% forecast in last year’s survey. But respondents remain more bullish about the prospects for their own businesses, targeting an average CAGR of 7.2%. In terms of service areas and client sectors, consultants are factoring significant upswings in contaminated land/remediation, waste management, chemical/pharma and transport on a worldwide basis. But negative checks are being applied to expectations for government-sourced and climate change & energy related work streams.
- International growth expectations led by Asia-Pacific - almost half of respondents active in the SE Asia (inc. China) region expect strong or substantial growth over the next five years, equating to an average projected CAGR of 8.3%, up from 6.4% in last year’s survey. The target CAGRs for Africa and the Indian-sub continent from 2017-2021 are also improved at 4.5% and at 6.3% respectively.
GET THE FULL DATA SET….Environment Analyst's 2017/18 Global Environmental Consulting Market Trends report has been released to our Global Market Intelligence Service (MIS) subscribers. An email containing the password and access details was sent out this week in order to download. Any queries regarding report access or subscriptions please contact Faye-Heslin Jones (e: email@example.com, t: +44 (0)01743 818008) or for editorial enquiries contact Liz Trew (e: firstname.lastname@example.org, t: +44 (0)2 1743 3603 2106)