Coronavirus (COVID-19) Contractor Impact Index Understand the impact of the COVID-19 outbreak on major contractors May 4th, 2020 Copyright @ GlobalData PLC. All rights reserved. Reproduction of part or all of this contents without permission is prohibited. COVID-19 Contractor Impact Index Methodology *Global 500 Contractors GlobalData’s COVID-19 Contractor • GlobalData’s COVID-19 Contractor Impact Index is a measure of how exposed the Global 500 contractors* are to the downturn Impact Index has been calculated for all in construction activity stemming from the coronavirus outbreak. contractors in the 2019 Global 500 Contractors list. The 2019 ranking was • The objective of the index is to provide a comparative measure for all contractors that reflects the estimated impact on their based on the executed contract values operations relative to the base pre-COVID-19 case. in 2019, which are calculated by taking the pro-rated value of contracts for • The index comprises both a country impact element and a sector impact element: projects (with a minimum value of US$25 million) that were in the ― The country impact element is calculated as the weighted average change in construction output growth prospects in 2020 execution stage in 2019, as tracked across all the countries in which the contractor had executed contract awards in 2019. For example, if a contractor secured all within GlobalData’s Construction executed contract awards in a single country, then the country impact element would reflect only the projected change in Projects Database. that country’s growth prospects. If a contractor had all awards equally shared across two countries, then the country impact would be an average of the projected change in growth in both countries. The Global 500 Contractors list comprises ultimate parent companies, ― The sector impact element reflects the sector diversification for all contractors. GlobalData’s analysts provide a risk score for which are attributed the total of each key sector based on the projected impact of COVID-19 on that sector, and the sector element is the weighted average of executed contract values for all of their the contractor’s spread across all sectors. For example, if a contractor secured all executed contracts awards in the oil and gas subsidiaries. sector, then the sector element would solely reflect the risk score attributed to that sector. If the contractor had all awards equally shared across two sectors, then the sector impact would be an average of the risk score given to these two sectors. • The overall impact is presented as a negative value ranging from 0 (no impact) to -100 (maximum impact). • The index score is not intended to predict changes in a contractor’s expected awards in 2020 or changes in its revenue. However, the index could be interpreted as a proxy for the potential change in a contractor’s revenue given its exposure to affected countries and sectors. Source: GlobalData 2 COVID-19 Contractor Impact Index COVID-19 Contractor Impact Index, by Regions as of 4th May 2020 The latest average “COVID-19 Contractor -35 -30 -25 -20 -15 -10 -5 0 Impact Index score for all contractors in the Global China 500 is -24.0. Although China was the original Eastern Europe epicenter of the global pandemic, its North-East Asia (Excl. China) contractors have the lowest scores, primarily reflecting that they are Western Europe focused on infrastructure, with South Asia, South-East Asia, Australia latest news suggesting that project works have The Americas been restarted. ” Middle East and Africa Source: GlobalData 3 COVID-19 Contractor Impact Index Stock Price Index as of 4th May 2020 Major construction firms have suffered a sharp “ 140 drop in the market valuations amid the 120 COVID-19 outbreak. 100 GlobalData’s tracker of 80 50 major companies 60 shows that the average 40 price had dropped to a 100 = 2016 Jan Index: low of 64.9 points in late 20 March, a fall of 38.4% 0 compared to the levels at the end of January. However, the markets Companies included have recovered some China Railway Construction Corporation Group Ltd Kiewit Corp Skanska AB AECOM Royal BAM Group nv China Railway Engineering Group Company Ltd Salini Impregilo SpA China National Chemical Engineering Co Ltd Mosinzhproekt JSC Doosan Corporation ground, ending April China Communications Construction Group Ltd Vinci SA TechnipFMC Plc Multiplex Laing O'Rourke Plc China State Construction Engineering Corp Ltd McDermott International Inc Fluor Corp Tecnicas Reunidas SA China Minmetals Corp 21% higher than the Actividades de Construccion y Servicios SA Stroytransgaz Lendlease Corp Ltd China General Nuclear Power Corp Shikun & Binui Ltd Larsen & Toubro Ltd Saipem SpA China National Petroleum Corp Siemens AG Clark Construction Company Inc Power Construction Corporation of China Samsung Group Petrofac Ltd China National Machinery Industry Corp Maire Tecnimont SpA March low. Bechtel Group Inc Shimizu Corp STRABAG SE China Construction First Building (Group) China Petrochemical Corp Hyundai Engineering & Construction Co Ltd China Sinogy Electric Engineering Co Ltd Balfour Beatty Plc M. A. Mortenson Co Yapi Merkezi Holding Inc. ” ASE Engineering Co PCL Constructors Inc Bouygues SA Shapoorji Pallonji & Co Ltd Ferrovial SA 4 Latest Developments (I) Disruptions as of 4th May 2020 . Bouygues UK has revealed it will begin ‘progressively’ reopening its UK construction sites following a three-week shutdown. Bouygues UK said it would re-open its sites and would operate at a condensed capacity over the coming weeks. On April 24th, Vinci announced that construction activity in France would gradually restart following the relaxation of lockdown measures. The firm revealed that the virus outbreak was having an adverse impact on business with many projects in France being put on hold. It is expecting a significant decline in revenues over the coming months. On 14 April, the Danish construction Vestas announced it was restarting construction activity in Spain following the lockdown restrictions. The firm halted all construction and manufacturing activities on March 31st following the lockdown measures announced by the government. Swedish contractor Skanska reported a 14% increase in Q1 revenues year on year, but the CEO warned that the outlook for the rest of the year was negative. The firm also revealed that 370 of its projects were affected by the lockdowns in the countries in operates in. Taylor Wimpey, a UK housebuilder, has announced a “phased return to construction” that will see its UK sites outside Scotland reopen on the week beginning 4th May. The CEO revealed he expects the firm to run at 80% of its normal capacity. Another UK housebuilder Persimmon announced on 29th April that it will gradually restart works on its construction sites across the UK. The firm also revealed that it does not plan to apply for any COVID-19 government funding schemes. The firm also reported that its forward sales stood at GBP2.4 billion (US$2.9 billion) to date, a fall from the GBP 2.7 billion recorded at the same time last year. Redrow also announced on April 27th that it plans to gradually restart construction works on May 18th. The firm suspended operations at the end of March following he lockdown measures announced by the government. Keller, a UK-based geotechnical contractor, has announced it is delaying its dividend payment to shareholders by two months until August. The firm cited a swift deterioration in UK construction activity in March as a reason for the delay. In mid April, Mace Group reported that was reopening some of the 90 sites that had been closed for two weeks because of the COVID-19 outbreak. However, the large-scale Battersea Power Station redevelopment project, on which Mace Group is leading Phase 2, is set to remain shut into May. 5 Latest Developments (II) Disruptions as of 4th May 2020 . On April 14, Dogus Grubu and Bilgili Holding, announced that work on the Galataport development in Istanbul would be halted until May following the death of a construction worker who contracted COVID-19. The UK’s Balfour Beatty is pushing ahead with the Midland Metropolitan University Hospital having put in place social distancing measures. The GBP 1 billion project is still due to open in the summer of 2022. In late April, Canada’s Aecon stated that the majority of governments across the jurisdictions in which the company operated had deemed the types of construction projects that Aecon works on to be “essential” services, and therefore it could continue with many of its operations, albeit mostly on a modified basis. Technip FMC has reported that there will be a 30% reduction in 2020 capital expenditures to US$300 million, over US$100 million reductions in annualized coss for Surface Technologies, which reflects the decline in North American activity, and a US$30 million cut in annualized corporate expenses. Australia's LendLease Group announced on April 28th that it would seek to raise AUD1.15 billion (US$740 million) to strengthen its position amid the COVID-19 uncertainty. AUD950 million would be in new equity via a fully underwritten share placements and up to AUD200 million through a non-underwritten share purchase. The company withdrew all forecasts provided with its first-half results. Italian-Thai Development announced on April 28th that it was postponing the submission of its financial statements owing to the disruptive impact of COVID-19 and the challenges this presents in assessing its financial position. This in part reflects the fact that its core construction business operates across India and Bangladesh, where strict lockdowns are in place. Belgium’s BESIX has reported that although project works in the Netherlands had carried on largely as normal, there had been significant disruption in Belgium, where civil and large building projects had slowed down by more than 50%.