Southern Africa an economic overview Extract from a presentation by Munesu Shoko during CONEXPO-CON/AGG 2018 International Trade Fair for Construction Machinery, Building Material Machines, Mining machines, and Construction Vehicles. March 13 16, 2018, Johannesburg www.bcafrica.com
Notes and copyrights The following charts were presented during CONEXPO- CON/AGG 2017 by Muneso Shoko. The following charts are only an extract from his presentation held. The charts were kindly provided by Mr Shoko who reserves all rights.
MARKET DRIVERS Usual picks and shovels of the industry backhoe loaders, skid steer loaders and telehandlers that are keeping the total numbers up The small segment represented 38,1% of the total unit sales back in 2010 when the particular year added up to 3 999 total unit sales The same segment continues to have a grip on the total market, racking in 51% of the 6 543 unit sales recorded in 2014
MARKET TRENDS Greater move towards compact equipment Urbanisation has become an important factor to cope with for African governments. Africa had 22 cities with more than 2 million inhabitants in 2010, and will have another 14 of that size by 2020. For long, backhoe and skid steer loaders have dominated the compact market (50% of total unit sales in SA) New solutions gunning for a share of the market (articulated loaders and compact excavator) Compact segment represented 38,1% of the 3 999 total unit sales back in 2010, rising significantly to 51% of the 6 543 total unit sales recorded in 2014 Strong competition with a whole lot of new entrants (MultiOne, Avant, Kubota)
MARKET TRENDS Greater uptake of telematics Especially fuelled by the plant hire sector Barloworld rolled out its VisionLink telematics platform 4 000 subscriptions within a year
MARKET TRENDS Plant hire is growing Upcoming contractor fraternity growing No capital outlay to invest in own gear Projects are becoming shorter due to their smaller nature The sector was the recipient of 22,8% of total unit sales of equipment sold in 2005 in Southern Africa, a figure that significantly leaped to 30,5% in 2014 Industry 2008 2009 2010 2011 2012 2013 2014 Construction 34,0 35,8 26,7 30,3 34,5 35,0 34,7 Forestry and Agriculture 5,5 7,3 7,8 7,4 7,7 6,3 8,5 Government 2,7 5,6 5,3 4,7 3,2 3,2 4,1 Industry 5,2 5,4 7,4 6.5 5,2 5,2 4,5 Mining 26,4 22,4 27,1 27,2 24,6 17,7 15,2 Plant Hire 24,1 21,7 23,9 21,9 22,1 30,5 30,5 Quarrying 2,2 1,9 1,9 2,0 2,7 2,0 2,6 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0
MARKET TRENDS Greater need for customisation Varying needs in different sectors (OEMs and dealers responding accordingly) Equipment designs informed by specific needs
MARKET TRENDS Second hand curse Influx of second hand equipment Greater drive towards equipment rebuilds (OEMs and Independent rebuilders)
PROJECT OUTLOOK Construction leads the way With 85 projects, Southern Africa represents 29,7% of all projects in Africa, and 28,9% in US dollar terms, valued at US$93,4bn. South Africa accounts for the largest amount of infrastructure and capital project activity in Southern Africa with 48,2%, followed by Angola with 12,9% and Mozambique and Zambia with 10,6% each South Africa also has the most projects by country, in Africa with 41 projects
PROJECT OUTLOOK Changing dynamics Private sector investment on the rise. Government-owned projects account for 60% of the market share, followed by Private Domestic-owned projects with 25,9% Real Estate sector accounts for 30,6% of activity, followed by Energy & Power which accounts for 24,7% in southern Africa Transport projects recorded the third largest share with 20% in 2016 Energy & Power remains a large contributor to economic development in the region and this trend is likely to continue in the future
PROJECT OUTLOOK Angola & SA lead on the project front South Africa and Angola are home to eight of the top 10 largest projects across Southern Africa with four projects each, while Mozambique and Zambia account for the remaining projects. The top 10 projects in Southern Africa account for 65% of the total value of projects in the region Angola accounts for the two largest projects in the region (Kaombo, Block 32 project in the Oil & Gas sector US$16b The Kusile Coal-Fired Power Plant in Emalahleni in the Mpumalanga province of South Africa is the third largest project in Southern Africa with a value of US$7,9bn
GROWTH OPPORTUNITIES Infrastructure gap Southern Africa is not immune to the infrastructure development gap we have seen in all parts of Africa lots of opportunity in the infrastructure development cluster USD95-billion = 10 years USD20-billion underway Positive outlook 2015-2020
GROWTH OPPORTUNITIES Key notes Infrastructure needs of the region as well as the vast natural resources promise to drive up demand for equipment Better mood in the resource extraction sector general consensus that commodity prices are on an upward trend and that a recovery in mining activity is gaining strength Possible fleet replacements this year due to postponed fleet replacement programmes in the previous difficult years More machines reaching the end of their cycles