Market Review

After the global economic outlook rapidly weakened in late 2011, composite leading indicators again turned to point towards a positive change in momentum in the OECD as a whole in early 2012. The key risks still relate to the recurring debt and other financial crises in the Euro-zone and there are significant differences in economic prospects between countries.

In the energy and the industrial sectors relevant to Pöyry’s businesses the prevailing economic uncertainty has been visible in clients’ cautious investment decisions. However, as the long-term fundamentals behind demand remain solid, underlying demand has continued steadily.

Public sector infrastructure investments have remained fairly stable in most markets, except for Spain, although the economic uncertainty has caused project delays especially in Eastern Europe and Latin America. Within the water supply and sanitation segment, public sector investment activity has continued modestly in Europe.

Due to the current macroeconomic uncertainty clients have been postponing decisions on using external advisory services. This has been mainly visible within the forest industry, and especially in North America, and within the energy sector in Central Europe.

Market Outlook 2012 (published in Financial statement release 2011)

After a good recovery in early 2011 the global economic outlook has rapidly weakened. The key risks in 2012 are related to the recurring debt and other financial crises in the Euro-zone. There are, however, significant differences in economic prospects between countries. In emerging markets, growth is expected to slow down but remain relatively good.

In the energy and the industrial sectors relevant to Pöyry’s businesses the long-term fundamentals behind the future demand remain solid. In the energy and industrial sectors demand is increasingly geared to emerging markets. However, increasing economic uncertainty may delay investment decisions. In the energy sector regulatory uncertainty is also prolonging the investment decision processes. The Fukushima accident clearly decreased the number of potential new nuclear investment projects in certain European countries but on the other hand it increased the need for other kind of power generation investments. Investment activity in energy transmission and distribution is expected to increase.

Several global megatrends support transportation and real estate investments in markets where Pöyry has exposure. Public sector investments are expected to remain fairly stable in most markets although the level of uncertainty has increased especially in Eastern Europe. Within the water supply and sanitation segment public sector investment activity is expected to continue modestly in Europe. However, the fundamental need for water sector and environmental expertise is expected to create demand for services within Pöyry’s scope. Public-private partnerships investments are expected to continue.

The current macroeconomic uncertainty and the debt crises may impact negatively the demand for management consulting services especially in North America and Central Europe as clients may be postponing decisions on using consulting services.