UK environmental consulting market grows 5%

Transcription

1 PRESS RELEASE 6 October 2014 UK environmental consulting market grows 5% Market recovery continues with third successive year of post-recession growth; sector revenues rise by 5.2% to reach 1.40 billion in 2013 and on course to rise by 5% again in this year However, staffing yet to match pre-recession levels Government austerity measures continue to bite with a 1.7% decline in public sector derived EC revenues last year; but this was more than offset by 7.6% growth in revenues from the private sector and regulated industries Top 34 practices control two-thirds of market, but trend for mega-mergers in global consulting/engineering space sees consolidation and shake-up amongst UK EC top tier Whilst some firms are still struggling in the austerity climate, others are enjoying success in some relatively buoyant sectors - notably those linked to national infrastructure projects and oil & gas and power developments The latest report from business intelligence and market research firm Environment Analyst finds that the UK environmental consultancy (EC) sector expanded by a solid 5.2% in 2013, to stand at 1,401 million. This follows a similar level of growth in 2012 (+5.1%) and 2.3% growth in 2011, after two consecutive years of significant declines in the wake of recession (see Figure 1). With this continued growth trend, the UK market is set to surpass its 2008 pre-recession peak of 1,479 million and is on course to grow by approximately 5% once again in In addition to the UK economic recovery and in particular the return to growth of the housebuilding sector increased investment in national infrastructure projects has played a big part in the market s bounce back. Steps taken during the years of recession to export the skills of British-based environmental consultancy talent to overseas projects and markets have also been a positive driver. In 2013, the report finds that international projects (outside of the UK) enquiries@environment-analyst.com tel +44(0) fax +44(0) Environment Analyst Limited, 140B Longden Coleham, Shrewsbury SY37DN, United Kingdom

2 accounted for 11.6% of the UK EC revenue total for the Top 34 UK environmental consultancy practices. However, growth across the sector has been far from uniform with government spending cuts continuing to hamper the recovery. In 2013, there was a 1.7% contraction in EC revenues from public sector commissioning bodies to stand at 339 million (equivalent to 24.2% of the total market), although this is an improvement compared to the declines of 2.4% in 2012 and 8.4% in Of the Top 34 players which are profiled in depth in Environment Analyst s series of market reports those most dependent on government sourced contracts are identified as Halcrow/CH2M Hill, Atkins, Ricardo-AEA, Jacobs and Mott Macdonald (ranked according to their segmental market shares in 2013). However, the public sector decline was more than offset by increased spend from within the private sector and regulated industries, which together saw a solid growth rate of 7.6% in 2013 to reach 1,062 million (equivalent to 75.8% of the total UK EC market). Contributing to this performance was a good year for the regulated industries (including energy, water and waste companies), which saw a 7.2% overall increase despite the characteristic intercycle lull in the water utilities capital investment (AMP) projects and ongoing competitive pressures in the waste management arena. Report author Liz Trew commented: Our survey figures suggest that it is very much the area of oil, gas and power which is driving up demand from within the regulated industries arena, although renewables has had more of a flat year reflecting wavering government policies and subsidies impacting project investment levels. Environmental consultancies with strong links to the oil & gas and nuclear sectors have fared well this year. The top five players serving the regulated industries are: RPS Group, Mott MacDonald, ERM, RSK Group and Halcrow/CH2M Hill. There was also increased demand from construction/property and transport clients, with yearon-year growth of 11.5% in 2013 based on the amalgamated revenues of the Top 34. Trew said: This trend reflects some large, complex and highly controversial developments from an environmental standpoint, including HS2 which has proven to be a major earner for those consultancies selected to contribute to the environmental impact assessment and stakeholder engagement as well as further recovery in the property development sector. The latest staffing trends among Top 34 shows an overall healthy 6% increase in UK EC headcount last year to reach over 10,500 full-time equivalent employees, although this figure is still some way off the number employed before the onset of recession.

3 The overall UK sector rankings for the Top 34 are shown in Figure 2. The UK EC market has been characterised by its fragmentation with no single player laying claim to more than a 5.5% share of total market revenues in However, the top tier is set for a major reshuffle on the back the recent round of mega-deals impacting the global engineering and infrastructure services industry, which has in the last twelve months included the either completed or intended pairings of Jacobs and SKM Consulting, AECOM and URS, Arcadis and Hyder, and WSP and Parsons Brinckerhoff. Each of these conjoined offerings will rank inside the UK EC market s top ten based on 2013 revenues, placing considerable pressure on the current top 3: RPS Group, ERM and Mott Macdonald. Trew commented: For the first time in its relatively short history we are going to see some real consolidation in the sector. It will be interesting to see how the global trend for ever-bigger multi-service providers will play out in the UK environmental consulting sector, where specialist expertise is a strong driver. In terms of service area trends, the report finds that four core EC practice areas continue to make up more than half of the UK sector by revenue proportion in They are: environmental impact assessment (EIA) & sustainable development (17.6%); contaminated land/remediation (15.0%); water quality & resource management (10.7%) and ecological/landscape services (10.4%) [see Figure 3]. What is particularly notable is that contaminated land has grown for the fourth year running, following its major collapse in response to the property market crash in The contaminated land segment lost at least a quarter of its market value in the space of two years, but in 2013 segmental revenues rose by 6.6% to reach 210 million almost on a par with its pre-recession peak value. Looking at the trend over the last five years, the disciplines of EIA, ecology and climate change and energy have been strongest in terms of the long-term revenue growth of the twelve major service areas assessed in the report. Together, these three work areas alone have added combined absolute sales volume of nearly 90 million during a period of negative growth for the market as a whole. These areas have undoubtedly benefited from government policy to increase investment in national infrastructure projects as a means of stimulating the economy, and also the development of the UK s offshore wind energy industry in earnest. The fact that there has now been three years of consistent growth for the EC sector against a backdrop of deep government spending cuts bodes well for its performance over the next few years. New market opportunities are still opening up, including the UK s nascent shale gas industry ( fracking ) which comes with a whole host of as yet poorly understood environmental

4 risks, as well as mandatory greenhouse gas reporting for listed companies and the new energy savings opportunity (ESOS) scheme - providing fertile ground for environmental consultancies. Contact for further information: Liz Trew, Editorial Director Tel: +44 (0) liz@environment-analyst.com FURTHER INFORMATION 1. The 2014 (preliminary) Market Assessment of the UK Environmental Consulting Sector includes analytical commentary and over 130 tables and charts looking in detail at the UK environmental consultancy sector, the service areas and client sectors within it, and the performance of the Top 34 operators. The 92-page report is available to subscribers of Environment Analyst s Market Intelligence Service. Our final analysis of the performance of the sector in 2013 will be published later in the year based on the complete set of FY2013/14 figures from the Top For further details (including a full list of contents and figures) see: 3. Our market analysis is based on core figures supplied by 50 companies (representing approximately half the sector in terms of UK environmental consulting revenues), a detailed analysis of the Top 34 consultancies, as well as market trends information collated from over 350 environmental business managers via our Market Trends survey conducted during February to June this year 4. Environment Analyst Ltd ( is a publishing and market research organisation focusing on the environmental consulting and support services sector we collect and analyse information from the industry for the benefit of the industry. Environment Analyst also publishes EA OnSite, Brownfield Briefing and Sustainable Building newsletters, as well as running 8 industry conferences each year and an industry awards dinner. 5. Environment Analyst s market research has identified more than 675 firms active in the UK environmental consulting sector, of which c167 achieve annual sales in excess of 1 million

5 6. The UK environmental consultancy sector remains highly fragmented, with the Top 34 each achieving revenues in excess of 10 million, accounting for 67% of the total market when combined (before any adjustments for sub-contracted revenue). Together these practices handled over 43,200 environmental consultancy projects, employing some 10,580 UK-based environmental consultancy staff in The charts below are provided for publication: Fig 1 UK environmental consulting market revenues, e Revenue ( million) ,479 1,472 1,375 1,401 1,331 1,245 1,239 1,267 1,332 1, % 1, % % 10.1% 10.5% 2.3% 5.1% 5.2% 5.1% -6.9% -10.0% % 25% 20% 15% 10% 5% 0% Annual growth (%) -5% -10% -15% SOURCE: ENVIRONMENT ANALYST

6 Fig 2 Top 34 ranking (preliminary) 2013 by UK EC revenues 1. RPS Group 2. Environmental Resources Management (ERM) 3. Mott MacDonald 4. Halcrow, a CH2M Hill Company 5. URS Infrastructure & Environment UK 6. RSK Group 7. Atkins 8. Jacobs Engineering 9. Arcadis 10. WSP 11. RICARDO-AEA 12. Arup 13. WYG Environment 14. AMEC Environment & Infrastructure 15. SKM Enviros 16. SLR Consulting 17. MWH 18. Golder Associates 19. Hyder Consulting (UK) 20. Bureau Veritas 21. Capita Property and Infrastructure 22. ENVIRON 23. Royal HaskoningDHV 24. Mouchel Group 25. Parsons Brinckerhoff 26. Temple Group and the Ecology Consultancy 27. PwC 28. Black and Veatch Ltd 29. Wardell Armstrong 30. JBA Consulting 31. AECOM 32. ADAS UK Ltd 33. Cefas 34. Waterman Energy, Environment & Design Fig 2 Market revenue breakdown by service area, 2013 Air quality 56 Climate change & energy 130 Contaminated land/remediation 210 Ecological/landscape services 146 EIA & sustainable development 247 Env. liabilities, risks & hazards Env. management & compliance Env. noise/vibration 38 Env./sustainability policy & strategy Waste management/recycling Water quality & resource management 149 Other services SOURCE: ENVIRONMENT ANALYST Revenue million

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