Even though turnover increased by 5% to DKK4,689m (£527.3m) in 2011, Cowi Group's annual accounts for 2011 show a decrease in earnings (EBIT) from DKK132m in 2010 to DKK77m in 2011.
"The globalisation of our industry and the trends of the world economy made it difficult for us to run our business, so 2011 was a challenging year for Cowi,” said president and CEO Lars-Peter Søbye. “But we still managed to increase our turnover. Unfortunately, earnings did not keep up, and the performance does not live up to our earnings targets."
Most of Cowi's major markets were affected by the difficult market conditions in 2011. High growth was achieved in Cowi Norway, and Cowi Sweden did significantly better than in 2010, but did not reach the level expected. And even though the different business areas demonstrated great differences, Cowi Denmark saw an overall decrease in turnover and earnings and did not reach the level expected, the company reported.
Furthermore, Cowi was highly affected by the Arab Spring, and especially in Bahrain where the engineering business had made significant investments in order to service the entire Arabian Gulf. In practice, the unrest led to customers stopping payments while others suspended their projects. The development in the Middle East resulted in an operating loss of DKK 75m in 2011.
However, 2011 also brought good results. The company's cash flow from operations went up by DKK318m to DKK297m in 2011. Cowi Norway also achieved the best result ever, turnover passing NOK1bn (£112.3m).
"Our business area railways, roads and airports also saw progress in 2011, and our major business line, Bridge, Tunnel and Marine Structures, recorded a solid performance once again,” said Søbye. “These business areas are also behind many of the most interesting projects won by Cowi in 2011, such as the new light railway in Aarhus, Denmark, Bergen Airport in Norway, a new suspension bridge across Izmit Bay in Turkey, the Follo Tunnel in Norway and the replacement of the Gerald Desmond Bridge in California, USA. Globalisation and the uncertain world economy result in an excess of consultants on the market. This reduces prices, but also opens up possibilities for growth in new markets. In 2011, Cowi invested in a host of initiatives to ensure that we are competitive also in future. The investments influenced our earnings in 2011, but we expect a considerable return in the long run.”
In particular, the company launched a new strategy, PowerHouse 2015, designed to lay down the framework for future earnings and growth. “In 2011, we also developed a brand new project management training programme and a new corporate solution for project, resource and financial management, launched in the spring of 2012,” said Søbye. “At the same time, we achieved a lean organisation, for instance by combining our emerging markets in China, the Arabian Gulf and Central and Eastern Europe into the unit Cowi CMC. We also expanded our organisation in India, which, to an increasingly larger extent, undertakes projects in cooperation with Cowi companies in the rest of the world."
He said that every crisis has its opportunities. With the prospect of growth in the national economies of Norway and Sweden and of planned large-scale public infrastructure investments in the USA and the BRIC countries, the company anticipates modest growth in turnover and a strong improvement in earnings in 2012.
"In 2011, we took the necessary steps to strengthen our organisation, profitability and competitiveness. PowerHouse 2015 makes us ready to take advantage of the opportunities offered by the new global world order," said Søbye.
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