BMI View: Government budget cuts and the ongoing implications of Operation Lava Jato have seen downgrade growth for Brazil's construction sector, and we now anticipate a recession in 2015 and 2016. The new BRL169bn logistics investment programme (PIL) will provide limited respite to the recession, as we expect take-up to be limited in the current climate. Over the longer term the scandal could force a much-needed restructuring of the Brazilian construction sector.
In June 2015, the Brazilian government announced the new PIL, which is effectively a continuation of the transport concessions programme - including some projects carried over. Despite the size of the scheme, with BRL69.2bn in concessions expected to take place between 2015 and 2018, we see limited prospects for the plan to reverse the recession over 2015-2016. In particular, we believe in the current environment there will be limited international interest unless projects are made more attractive, whilst domestic companies will struggle to bid due to capital constraints as a result of Operation Lava Jato.
Operation Lava Jato (car wash) - a widespread government investigation into contracting practices at Brazil's national oil company Petrobras - has implicated the construction sector. The investigation started in March 2014 and has initially identified 23 industry groups (including a number of contractors across the energy and construction space) which have been banned from participating in Petrobras contracts pending further investigation.
Key implications of this scandal:
We expect company cashflow to be hit hard, with the ability to raise financing constrained by the investigation and payment of work done for Petrobras halted. As such, we see the potential for work stoppage at construction sites, loan defaults and bankruptcies. Several companies have already declared bankruptcy and we expect more could follow.
We see the scandal delaying infrastructure projects, in addition to threatening the...
The Brazil Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Brazil Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Brazilian infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Brazil to test other views - a key input for successful budgetary and planning in the Brazilian infrastructure market.
- Target business opportunities and risks in the Brazilian infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Brazil.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.