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Global environmental consulting market sees strengthening recovery boosted by infrastructure related demand 



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Building on its tentative return to growth in 2015 (+2.1%), 2016 saw strengthening fortunes in the worldwide market for environmental consulting services with a further 3.0% increase despite persistent challenging market conditions particularly relating to the international mining and oil & gas sectors and contraction in the dominant North American market Global market growth indicated for 2017 is expected to show further improvement at 4.1% reflecting the momentum particularly in infrastructure & development markets and strong demand in Europe coupled with economic recovery in other regions, notably Latin America and Asia-Pacific Twenty three companies are leading and consolidating the global environmental consulting (EC) sector - together accounting for 46% of total $29.4bn market The diverging fortunes of firms positioned as specialists vs. large-scale integrated/multidisciplinary service providers reported in recent years appears to be waning, with the different business models experiencing similar performance dynamics in 2016/17 - indicating a more even playing field The global EC market is set to reach $34.4bn in the next five years - up 17.3% on its 2016 value - as emphasis increasingly shifts to infrastructure-related work across both mature markets and those less well developed

The value of the global environmental consultancy (EC) market reached US$29.4bn (£21.7bn) in 2016, up 3.0% over the previous year, according to the latest report1 by business intelligence provider Environment Analyst. Having lagged behind global economic growth since the 2012 peak in the natural resources

super-cycle and subsequent erosion in oil prices, in 2016 the EC sector growth all but matched GWP of 3.1%. Growth in the global EC sector is expected to strengthen further in 2017 at 4.1%. Editorial director of Environment Analyst's Global Market Intelligence Service and co-author of the

Global Environmental Consulting Strategies and Competitor Analysis 2017 Global research summary for survey participants Environment Analyst would like to take this opportunity to thank you for your help with our market research last year looking at the environmental consulting sector in 2016 and 2017. We are very grateful to all those who have assisted us by completing our surveys, participating in email/phone/ face-to-face interviews and verifying/ commenting on their company profiles. Our thanks go to all who have helped. With the last of the consultancies reporting their results for 2016/17, we are pleased to say that last year’s research has come to an end and, by way of thank for your assistance, we can now provide you with this free summary of selected research findings. Please feel free to circulate the document among your colleagues. If you subscribe to our Market Intelligence Service, you should have received instructions separately on how to download the full reports.

w w w .Environm e nt-Analys t.com [email protected] tel +44(0)1743 818008  fax +44(0)1743 818121 Environment Analyst Limited, 11-15 Market Street Shrewsbury SY1 1LG, United Kingdom

report Liz Trew comments: "The market finally looks to be emerging with real conviction from the oil & gas and natural resources-influenced downturn which has impacted the global environmental consulting sector since the height of the commodities super-cycle - so much so that in revenue terms it has now comfortably exceeded its previous peak value of $28.9bn in 2012. It’s welcome proof that the industry has successfully repositioned itself to a new economic environment with so many different demand factors at play compared to just five years ago." The fully updated and further extended version of the report, now in its seventh year, provides a comprehensive picture of the current state of the global EC sector and competitive landscape through detailed company profiles and financial statistics from the 23 players judged to be the most geographically diverse, globally ambitious and largest companies active in this field (collectively referred to as the ‘Global 23’). Based on its deep-diving analysis of the leading firms, the study finds that the recent global market dynamics have been bolstered by strong demand relating to infrastructure & development related work, particularly in Western Europe - driving year-on-year growth of almost 9% in this region. In stark contrast, the global EC sector’s largest regional revenue generator North America - which accounted for 51% of the global sector in 2016 - saw a slight decline in EC revenues at 0.5%, reflecting the continuing depressed market conditions in natural resources and the repercussions of a presidential election year, further compounded by the continued squeeze on key federal departmental/agency budgets. Together the Global 23 are estimated to make up 46% of the worldwide EC market, with their aggregated EC revenues increasing by 5.2% in 2016. The report categorises firms into three main business model types - large-scale integrated, multidiscipline and specialist according to their size and the prominence of EC activities within the overall business. Growth rates and performance across the three segmentations have been shown to vary considerably in prior years, with the generally smaller specialist firms initially outperforming their larger diverse competitors and showing greater resilience in challenging market conditions, before momentum started to shift towards the large integrated and multidisciplinary players. But the most recent analysis for 2016 shows a more consistent performance with all three models showing

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aggregated year-on-year internal (organic) growth of c1-3%. Environment Analyst's Trew says: “Our conclusion is that the playing field has really levelled out now between the various types of operator, and the specialists no longer seem quite so resilient whilst many of the larger multi-service firms are benefiting from proactive M&A strategies and also the trend towards major complex infrastructure projects that often require a multidisciplinary approach. It remains to be seen whether firms that are still struggling can take the necessary steps to adapt, modify and innovate their offerings to the new paradigm of low energy prices and much more cost-conscious clients across the board.” The top ten players, in order of gross global EC revenues in 2016, are: AECOM, CH2M (now owned by Jacobs), Tetra Tech, Arcadis, Environmental Resources Management (ERM), Golder Associates, Wood E&IS (formerly Amec FW E&I), RPS Group, Stantec (inc. MWH) and Ramboll. The next 13 in order are: HDR, WSP, GHD, SWECO, Jacobs, ICF and Antea Group in joint 16th, Royal HaskoningDHV, Cardno and Mott MacDonald in joint 19th, SLR and WorleyParsons in joint 21st, and Atkins (member of SNC-Lavalin Group). The three market leaders in each global region are shown on the global map overleaf. Significant M&A activity and consolidation involving the top end of the industry in the last few years is evident with the Global 23’s combined global market share growing to over 46% in 2016, up from 40% in 2010. Large-scale integrated service firm AECOM is the market leader for the third year running largely thanks to its $4bn acquisition of fellow US consulting and engineering giant URS back in 2014. With group revenues now over $17bn and staff of c90,000 (around 10% of which make up its EC operation), AECOM is reaping the benefits of post-merger synergies and economies of scale, having further extended its lead over second-placed CH2M this year and achieving a top-three positioning in three major regions: North America, Asia-Pacific and West Europe. But CH2M’s recently completed takeover by another Global 23 player, Jacobs, will see the number two player close the gap on AECOM, with the combined Jacobs/CH2M operation already indicated as the global market leader in the more broadly defined 2

‘Environmental Services (including consulting)’ sector in this report. The latest wave of M&A impacting the global EC Sector has brought a number of new names to the top rankings. Following on from the entry of Sweco and Stantec last year - through their respective acquisitions of Grontmij and MWH - this time round we see for the first time Wood Group following its 2017 acquisition of AMEC Foster Wheeler and its environment & infrastructure (E&I) business (with the latter immediately rebranded Wood Environment & Infrastructure Solutions), and also Canadian SNCLavalin, the new owner of Atkins (which continues to operate as a standalone unit). The EC staff numbers employed by the Global 23 stood at approximately 79,000 in 2016, up from 74,000 in the previous year. The average EC contract value, at $69K, has remained virtually unchanged in recent years. Based on the service area breakdown of the Global 23's aggregated EC revenues, Environment Analyst finds contaminated land remains the largest single discipline in the EC market in 2016 accounting for 31% of the total, ahead of the 25% share held by water and waste management services (although this was the fastest growing discipline recording growth at an impressive 17%). Environmental impact assessment (EIA) & sustainable development accounts for a further 19% share, whilst environmental management, compliance and due diligence services represent 13%. Climate change & energy related services generate a further 8%, but this area was shown to be in decline in 2016. In terms of client sectors, outstanding (double-digit) growth in demand came from infrastructure & development related projects, representing a 12% share of the total global EC market, whilst the largest segment - energy & utilities (27%) - also saw an abovethe-market average increase. By contrast there was another year of contraction in demand from the mining, extractive and process industry sector combined (see figures overleaf).

previous edition of the report on the back of renewed strength in European markets and further economic recovery in other regions, including Latin America and Asia-Pacific. Liz Trew concludes: “We have had to factor in significant uncertainty to our global market forecast model - notably surrounding Trump and the US market and to a lesser extent Brexit and the UK/Europe - but our projections are based on the assumption that growth in infrastructure related opportunities will accelerate over the next five years as a dominant driving force with a projected CAGR of 5.7% to 2021 and an overall increase of 32%. “The outlook is unquestionably improving following a prolonged period of difficulty, but given the still fragmented market and what remain quite modest growth projections M&A activity by – and impacting – the Global 23 is likely to continue at a fair pace, and also given the pressures in the wider engineering and support services industry. Although this is expected to be more concentrated among smaller and mid-size players, we also expect greater crossover with the IT sector, reflecting the growing importance of digital technologies, software applications and big data management and environmental analytics in shaping the future of EC services. We also expect to see much more of some the Eastern rising stars such as Dar Group and Surbana Jurong.”

Contact for further information: Liz Trew Editorial Director Tel: +44 (0)20 3 603 2107 Email: [email protected]

Yuliya Stuart, Account Manager Tel: +44 (0)1743 818 008 Email: [email protected]

According to the study, the global EC market is forecast to reach $34.4bn by 2021, up 17.6% on the 2016 figure and representing a five-year compound annual growth rate (CAGR) of 3.2%. Whilst retaining a high level of caution given the significant uncertainties around the global economic and geopolitical landscape and slow recovery expectations around the recovery in oil prices, growth has been revised slightly upwards this year compared to the w w w .e nvironm e nt-analys t.com

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Fourteen tables and charts are provided overleaf as a thank you for your participation in the survey. Please visit https://environment-analyst.com/global for further information.

FURTH ER INFORM ATION 1. Global Environmental Consulting Strategies and Competitor Analysis 2017 is an in-depth market report including detailed profiles of 23 leading operators – for further information (including a full list of contents and figures, and sample company profile download) see www.environment-analyst.com/global 2. The report is based on core financial figures and strategic information collated through an annual research process in collaboration with the environmental consultancy companies – via market surveys, phone/face-to-face interviews with senior executives, and publicly-available annual reports/accounts and websites. The 23 profiled firms have all had the opportunity to review their company profiles and core financial statistics 3. The report is part of Environment Analyst’s 2017 Global Market Intelligence Service. The full service includes this market assessment, company profiles of the leading 23 environmental consultancies updated throughout the year, the results of a global market trends survey issued each summer, weekly environmental services business news and Market and Company Insight articles.

4. Environment Analyst Ltd (www.environment-analyst.com) 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

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Ranking

Figure 2 Global environmental consultancy market share by service area 2016

Consultancy

1

AECOM

2

CH2M

3

Tetra Tech Inc

4

Arcadis

5

Environmental Resources Management (ERM)

6

Golder Associates

7 8

Wood, E&IS (formerly Amec Foster Wheeler E&I) RPS Group

9

Stantec (incorporating MWH)

10

Ramboll

11

HDR

12

WSP

13

GHD

14

Sweco

15

Jacobs

16

ANTEA GROUP

17

ICF

18

Royal HaskoningDHV

19

Mott MacDonald

20

Cardno

21

SLR

22

WorleyParsons

23

ATKINS (member of SNC-Lavalin Group)

Figure 4 Ranking (by revenue) of the Global 23, 2016 Figure 3 Global environmental consultancy market share by client sector 2016

Figure 5 Global environmental consultancy market share by region 2016

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Figure 6 Range of average turnover growth 2016

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Figure 8 2017 and 2018 prospects in relation to 2016, by percent of respondents

Figure 9 Staff recruitment trends, by consultancy size

Figure 10 Range of remuneration change in last 12 months, by percent of respondents

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Figure 11 International turnover growth potential (CAGR)

Figure 12 Key operational trends (compared with previous year), by percent of respondents

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Figure 13 Strategies consultancies expect to adopt over next 5 years, by percent of respondents

Figure 14 Drivers influencing demand for environmental consultancy over next five years

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Market Intelligence Service - Global What you get in your corporate membership package Our flagship report, Global Environmental Consulting Strategies and Competitor Analysis Profiles of 23 global environmental consulting firms, plus year-on-year comparisons Includes data from the 2017 and 2018 market trends surveys Full access to the online news service

See ordering details at www.environment-analyst.com/global

Global Environmental Consulting Strategies and Competitor Analysis This latest edition (issued December 2017) contains profiles of the following 23 global environmental consultancies: AECOM, ANTEA GROUP, Arcadis, ATKINS (member of SNC-Lavalin Group), Cardno , CH2M, Environmental Resources Management (ERM), GHD, Golder Associates, HDR, ICF , Jacobs , Mott MacDonald, Ramboll, Royal HaskoningDHV, RPS Group, SLR, Stantec (incorporating MWH) , Sweco, Tetra Tech Inc, Wood, E&IS (formerly Amec Foster Wheeler E&I), WorleyParsons, WSP

Your single source for strategic assessment and competitive analysis Environment Analyst is pleased to announce the latest edition of its strategic assessment and competitor analysis of 23 of the world's top environmental consultancies. Packed with company data, competitor intelligence and strategic insight, this in-depth review of the top operators is the first report to assess the global operations and strategies of the firms with multi-region operations. Aimed at global executives, advisors and investors in environmental consultancies, this 200-page report will help: Assess your global and regional competitive position - we provide comprehensive data and insight into the consultancies with international operations, including environmental revenues, geographical breakdown, service area revenues and client sector split. Through this data you'll be able to determine your competitive position alongside the key players. Review the global strategies of your competitors and companies in which you invest or plan to invest - following comprehensive interviews with key players in the sector, and a review of their global operations, challenges and opportunities, we have provided the only independent assessment of each firms' strategic approach to growing their global businesses. Through the report you'll be able to assess where competitors are strong/weak, what their strategies are, and where are the gaps and opportunities. This data can support your investment and operational decisions. Identify growth opportunities to aid strategic planning and operational reviews through our deep, expert and independent analysis of these consultancies, you'll have information and insight available to support your corporate decision-making. Understand how others see your company - with Environment Analyst's independent review. Assess whether your internal view of your firm is reflected in the wider market, from a market intelligence provider who really knows and understands the sector. Support your financial assessment - financial analysis only tells part of the story. Our expert, independent assessment of historic record, service, regional & client sector performance, current strategies and future opportunities completes the picture. w w w .e nvironm e nt-analys t.com

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