The New York-based M&A and strategic advisory firm, AEC Advisors, has released the results of the latest iteration of its COVID-19 industry impact survey undertaken at the end of last month. The survey indicates a decline in organic growth across the North American AEC (architecture, engineering and consulting) sector from the 9.7% achieved in 2019 (flagged as a ten-year record high), to just 1.0% in 2020.
Some 207 firms were represented through the CEO and CFO level survey responses, representing $104bn in combined revenues. The participants are expecting a post-COVID rebound of 5.0% in 2021.
Interestingly, the average after-bonus margin (EBITA/net revenue) is only expected to decline marginally from 9.6% in 2019 to 9.1% this year. But AEC Advisors warns that this could be overly optimistic: "We believe firms may be underestimating the impact of revenue shortfalls on 2020 earnings.
"Some firms may be relying on current utilisation data that shows increased productivity during work-from-home conditions, but (a) we don’t know what the 'quality' of this utilisation is and whether there will be subsequent write-downs, and (b) future project delays cancellations will inevitably push utilisation rates down unless more firms cut staff (and currently, only half of firms are cutting staff)."
The survey findings also suggest that, by sector, energy and private buildings projects continue to face the most delays for AEC firms, while public sector infrastructure projects face the least disruption. ‘Environment’ as a sector falls somewhere in the mid-range but is noted for a negative movement in ‘new project pursuit activity’ by end market, according to the survey responses.
AEC Advisors commented: "With the vast majority of end-markets now seeing declines in new project pursuits, we expect many firms will experience a prolonged negative impact, which is likely to creep into 2021."
More than 50% of firms said they have already, or plan to, put staff on furlough or make layoffs - with the median firm saying these plans will impact 5% of their workforce.
Environment Analyst, together with AEC Advisors and BST Global, are partnering to host a panel-led webinar to explore the impacts and challenges of navigating the crisis in Europe. The European CEO Forum Webinar will be taking place on 28 May, featuring the CEOs/MDs of ERM, Ramboll, Witteveen+Bos and Egis. This is a free virtual event open to all business leaders and senior executives across the industry. Register for a place here.