Sobratema Study of the Brazilian Market for Construction ... · Brian Nicholson MiniMax Editora...

Brazilian Association of Technology for Equipment and Maintenance

Sobratema Study of the Brazilian Market for Construction Equipment – 2010-15

Sobratema Study of the Brazilian Market

for Construction Equipment – 2010-15

Conclusions

Copyright © Sobratema 2010 1

São Paulo, December 02, 2010

Brian NicholsonMiniMax Editora Especializada Ltda



1 – Brazil within a global context

• The world market for construction equipment

• Sobratema 2010 Study

ContentsContents


•Sobratema 2011 Study

2 – Comments on the economy and projection 2015

Rubens Sawaya, Insight Consultoria



In thousands

1.100

1.000

900

800

Average 2005-2009 = 821 thou

Average 2010-2014 = 782 thou

- 5%

The world has been getting back on its feet


Source: Off-Highway Research, London Includes heavy construction (yellow) equipment line, and certain types of equipment for handling

and paving

700

600

500

400

- 40%



Europe China

But there’s the slow lane... and the express lane


Source: Off-Highway Research, London - Data on Brazil provided by Sobratema + AbimaqIncludes heavy construction (yellow) equipment line, and certain types of equipment for handling and paving

North America

India

Brazil



The past.., and the futureExpected growth compared to past performance

Market 2010-14 x 2005-09

North America - 43%Europe - 33%China + 50%


China + 50%India + 84%Brazil = 2010 + 120%Brazil (forecast) + 172%

But.... Brazil is just 3.5% - 4.0% of the global market

Source: Off-Highway Research, London - Data on Brazil provided by Sobratema + AbimaqIncludes heavy construction (yellow) equipment line, and certain types of equipment for handling and paving



12

14

16

18

20

In the USA, forecasts are being revisedConstruction equipment

Growth p.a. %

12

14

16

18

20


Source: U.S. Association of Equipment Manufacturers (AEM)U.S. Construction Equipment Industry Market Forecast

0

2

4

6

8

10

12

2010 2011 2012

Última

Atual

Previous

Current

0

2

4

6

8

10

12

2010 2011 2012

Última

Atual

Previous

Current



And in Europe, tooConstruction of housing + infrastructure

Index, 2006 = 100; constant prices

Forecasts:


Source: Euroconstruct

Forecasts:

End of 2009

More recently



World economic growth through to year 2015

Contribution share - advanced economies

Contribution share - emerging and developing economi es


2001: the last year in which advanced economies > t han emerging + developing economies



• Andrade Gutierrez (construction) - Mário Humberto Marques (presidente)

• Camargo Corrêa (construction) - Pedro Luiz Giavina Bianchi

• Carraro (parts) - Rissaldo Laurenti Jr

Sobratema Technical Support Group



• Escad (rental) - Eurimilson Daniel

• Galvão Engenharia (construction) - Silvimar Fernandes Reis

• Lequip (mining equipment) - Otávio Lacombe

• Odebrecht (construction) - Afonso Mamede

• Vale (mining) - Luiz Felipe Rocha

Coordination for Sobratema: Paulo Lancerotti, executive director

External consultants:- Brian Nicholson, MiniMax Editora Especializada Ltda - Rubens Sawaya, Insight Consultoria Econômica Ltda



The Sobratema Study

• Began in 2007

• Study of demand in the Brazilian market:“production minus exports plus imports”

• Heavy construction (yellow) line + handling + trucks + wheeled tractors- Includes construction equipment in mining and agriculture


- Includes construction equipment in mining and agriculture- Includes trucks + tractors purchased by the sector of construction

• Prepared annually in October; published in November/December

• Based on multiple sources

• Proprietary company data are not disclosed

• Does not calculate individual company market share

• Prospecting carried out throughout the year,• Prospecting carried out throughout the year, with teleconferencing New!



Methodology

• Three horizons: three procedures

• Year 0 2010 Estimates from manufacturers, sector sources, others


• Year 0 2010 Estimates from manufacturers, sector sources, others

• Year 1 2011 Estimates from manufacturers, buyers, sector forecasts

• Year 5 2015 Macroeconomic and sector forecasts



Domestic Sales (including imports) 2009* 2010 Δ

Off-highway Trucks 50 150 200%Hydraulic excavators 2,900 5.500 90%Skid steers 1,200 1.750 46%Motor graders 1,250 2,150 72%Wheel loaders 2,450 4,400 80%Backhoes 4,650 7,300 57%Compactor rollers 1,500 2,540 69%Track-type tractors 550 1,150 109%Subtotal: heavy construc. (yellow) line 14,550 24,940 71.4%

Comparison 2009-2010


Subtotal: heavy construc. (yellow) line 14,550 24,940 71.4%

Portable compressors 1,400 1,800 29%Tower cranes 200 400 100%Mobile cranes (crawler, truck, etc) 400 500 25%Aerial work platforms 900 3,000 233%Telehandlers 150 400 167%Heavy wheel tractors** 2,160 3,590 66%Subtotal: other equipment 5,210 9,690 86.0%

Subtotal: main construction equipment 19,760 34,630 75.3%

Highway trucks** 21,600 35,900 66%

Total: main construction equipment 41,360 70,530 70.5%

*2009 – revised data; **Estimate of demand in construction



Growth in 2011: three visions

• Manufacturers: - Heavy Construction (yellow) Line – growth between 0% - 10%- Other segments – possibly 10% to 20%, or greater

• Construction companies:- Majority expect growth of the market


- Majority expect growth of the market - Prospecting indicates purchasing up to 60% greater in volume (excluding Belo Monte)

• Uncertainties:- Will there be funding/financing for so many construction works?- Will there be funding/financing for the purchase of so much equipment?- Other bottlenecks?



What buyers say about 2011Survey of a dozen companies, highlights:

• Total expenditures: US$ 135 million → US$ 225 million (+67%)

Units

• Equipment (total): 677 in 2010 → 1081 in 2011 (+60%)

Heavy Construct. Line: 273 → 461 (+69%)


• Heavy Construct. Line: 273 → 461 (+69%)

• Highway dump trucks: 133 → 411 (+209%)

• Highway trucks (others): 206 → 151 (-27%)

• Mobile cranes: 7 → 7 (unit value US$ 0.81 Mio → US$ 1.98; +146%)

• Tower cranes: 8 → 4 (unit value US$ 0.53 Mio → US$ 0.97; +84%)

• Portable compressors: 21 → 22

FX conversion rate: 1USD = 1.8 BRL



Domestic CE Sales (including imports) 2009* 2010 Δ 2011 Δ

Off-highway trucks 50 150 200% 230 53%Hydraulic excavators 2,900 5,500 90% 6,150 12%Skid steers 1,200 1,750 46% 1,930 10%Motor graders 1,250 2,150 72% 2,400 12%Wheel loaders 2,450 4,400 80% 5,050 15%Backhoes 4,650 7,300 57% 7,520 3%Compactor rollers 1,500 2,540 69% 2,800 10%Track-type tractors 550 1,150 109% 1,270 10%Subtotal: heavy construction (yellow) line 14,550 24,940 71.4% 27,350 +9.7%

Comparison 2009-2010 and projections for 2011


Subtotal: heavy construction (yellow) line 14,550 24,940 71.4% 27,350 +9.7%

Portable compressors 1,400 1,800 29% 2,100 17%Tower cranes 200 400 100% 420 5%Mobile cranes (crawler, truck, etc) 400 500 25% 600 20%Aerial work platforms 900 3,000 233% 3,400 13%Telehandlers 150 400 167% 500 25%Heavy wheel tractors** 2,160 3,590 66% 3,950 10%Subtotal: other equipment 5,210 9,690 86.0% 10,970 +13.2%

Subtotal: main construction equipment 19,760 34,630 75.3% 38,320 +10.7%

Highway trucks** 21,600 35,900 66% 39,500 10%

Total: main construction equipment 41,360 70,530 70.5% 77,820 +10.3%

*2009 – revised data; **Estimate of demand in construction



Sobratema Study of the Brazilian Market for

Construction Equipment – 2010-15

Copyright © Sobratema 2010 16Copyright © Sobratema 2010

Construction Equipment – 2010-15

Rubens R. SawayaInsight Consultoria Econômica

[email protected]



Equipment Market• Sales grow above expectations• Growth of 82% Jan.-Sept. 2010/09• Growth of 70% - 2010/09• 70 thousand machines expected to be sold in 2010

400

Vendas Máquinas da Construção Sales of Construction Machines


0

50

100

150

200

250

300

350

400

jan

.07

mar

.

mai

.

jul.

set.

no

v.

jan

.08

mar

.

mai

.

jul.

set.

no

v.

jan

.09

mar

.

mai

.

jul.

set.

no

v.

jan

.10

mar

.

mai

.

jul.

set.

20

02

=1

00

Fonte: Insight

Jan.

07

Mar

May Jul

Sep

Nov

Jan.

08

Mar

May Jul

Sep

Nov

Jan.

09

Mar

May

Jul

Sep

Nov

Jan.

10 Mar

May

Jul

Sep

Source: Insight



Production of machines and equipment - Construction• Jan-Sept growth of 143% compared to 2009• Close to the highest monthly level in 2008• Manufacturers resume investments in expansion• New investors in the rental segment

300

Bens de capital para construçãoProdução Física

Capital Goods for Construction Physical Production


0

50

100

150

200

250

300

jan

/07

abr/

07

jul/

07

ou

t/0

7

jan

/08

abr/

08

jul/

08

ou

t/0

8

jan

/09

abr/

09

jul/

09

ou

t/0

9

jan

/10

abr/

10

jul/

10

Índ

ice

20

02

= 1

00

Fonte: IBGE

Jan

07

Apr

07

Jul 0

7

Oct

07

Jan

08

Apr

08

Jul 0

8

Oct

08

Jan

09

Apr

09

Jul 0

9

Oct

09

Jan

10

Apr

10

Jul 1

0

Source: IBGE

Inde

x 20

02 =

100



Equipment Market - 2010

• Surprising result

• Acceleration of the PAC – Elections/FIFA World Cup/ Olympics

• Availability of funding for infrastructure

• New modes of private sector participation

• Construction has grown faster


• Construction has grown faster

• Government Programs

• Private Enterprise

• Mining has grown more than expected – growth of Chinese economy

• US and European Crises – little effect on Brazil/China



Outlook for 2011-2015

Positive Factors

• Persistence/Acceleration of the PAC – World Cup/ Olympics

• New modes of funding/financing: Securitization/CRIs

(certificates of receivables) / LCIs (letters of credit)

• Maintenance of volume of BNDES financial resources (funding)


• Maintenance of volume of BNDES financial resources (funding)

• New funds from pre-salt layer petroleum as of 2013

• New forms of private and foreign participation

• Continuing growth in civil construction (income/employment)

• Persistence of growth in China:

• Gradual replacement of external market with internal market

• Agricultural and mineral commodities markets



Outlook for 2015

Challenges

• High population of new equipment

• FX rate / Interest: Brazil’s main problems

• Stimulate investment/industrial production (low Gross Fixed Capital Formation - GFCF)


Fixed Capital Formation - GFCF)

• Preservation of jobs/income rising

• Maintaining rates of growth of 5-7% p.a.

• Increases collection of taxes/decreases public deficit

• Ensures continuing government investment

• Ensuring employment/income – avoid default

• Avoid realty bubble with growth in employment/income

• China diversifies suppliers of commodities – long term



Equipment Market – Projections for 2011-2015

• Growth driven by infrastructure and civil construction• Should be more moderate from now on – high population• Depends fundamentally on political decisions

Projeção do mercado de máquinas e equipamentos

Infraestrutura Construção civil Mineração Agricultura

Projection for the market of machines and equipment

Infrastructure Construction Mining Agriculture


0

10

20

30

40

50

60

2009 2010 2011 2012 2013 2014 2015

Milh

are

s

Fonte: Insight

In th

ousa

nds

Source: Insight



Equipment Market – Projection• Slight deceleration in 2012-13 – equipment population high• Events: FIFA World Cup/Olympic Games drive growth 2013

2009 2010 2011 2012 2013 2014 2015Infraestrutura 18 31 34 37 41 47 53Construção civil 15 26 29 31 35 39 44Mineração 6 10 11 12 14 15 17

Projeção do Mercado de Equipamentos da Construção - Unidades MilProjection for Construction Equipment Market – Thous ands of Units

Infrastructure Civil Construction Mining Mining

Infrastructure Civil Construction Mining


Mineração 6 10 11 12 14 15 17Agricultura 2 3 3 4 4 5 5Total 41 71 78 85 94 106 119

2010 2011 2012 2013 2014 2015Infraestrutura 69,7 10,1 9,1 11,1 13,1 12,0Construção civil 70,6 10,4 8,8 10,8 12,9 12,2Mineração 72,9 9,6 9,0 10,8 12,8 12,0Agricultura 71,2 15,4 9,7 11,6 13,3 10,8Total 70,5 10,3 9,0 11,0 13,0 12,0Fonte Insight

Projeção do Mercado de Equipamentos da Construção - Taxas de Variação % aaProjection for Construction Equipment Market – Rates of Variation % pa

Mining AgricultureMining AgricultureMining Agriculture

Infrastructure

Civil Construction

Mining

Agriculture

Source: Insight



Projeção da população de equipamentos com até 10 an os de uso - em mil unidades2009 2010 2011 2012 2013 2014 2015

Infraestrutura 122 146 171 198 231 270 313Construção civil 105 125 146 169 195 228 263Mineração 41 48 57 66 76 89 103Agricultura 12 14 17 20 23 27 32

Equipment Market – Projections for Population• Population of equipment growing strongly• Expected to grow 2-fold between 2010-2015

Infrastructure

Civil Construction

Mining

Agriculture

Projection for Population of Equipment with up to 1 0 years of use – in thousands of Units


Agricultura 12 14 17 20 23 27 32Total 280 333 391 453 526 614 710Projeção da população de Equipamentos com até 4 ano s de uso - em mil unidades

2009 2010 2011 2012 2013 2014 2015Infraestrutura 69 88 107 122 144 160 187Construção civil 59 75 91 103 121 134 157Mineração 23 29 35 40 47 52 61Agricultura 7 9 11 12 14 16 19Total 157 200 244 277 327 363 424Fonte Insight

Agriculture

Infrastructure

Civil Construction

Mining

Agriculture

Projection for Population of Equipment with up to 4 years of use – in thousands of Units

Source: Insight

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