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08/02/2024

Despite persisting obstacles, the engineering sector continued to thrive in 2023

Bilan Ingénierie 2023

After two years of strong post-covid activity in 2021 and 2022, the engineering sector continued to grow in 2023, albeit at a slightly slower pace.

Technology consultancies have held up better, recording growth of 6.5% in 2023, following an increase of 8% in 2022. This solid performance can be explained by the continued demand for services related to the digital revolution, fuelled by new technologies and, in particular, the steady development of artificial intelligence. These are driving companies and governments to invest in their digital transformation by outsourcing their R&D in order to access skills that are often not available in-house. Leading companies such as Capgemini, Assystem, and Alten have fully benefited from the increase in digital investment, winning major contracts such as the one signed between Capgemini and the UK government in May 2023 (development of the EBSA platform for border and immigration control).

Construction engineers have had a more difficult year: the decline in activity among property developers and CMI graduates has led to a fall in new housing starts, both for multi-family and single-family dwellings, while the non-residential sector has also contracted as a result of financial pressures on companies and the worsening economic situation (housing crisis combined with inflation and the rise in property interest rates, widespread use of remote working after the covid pandemic, etc.). Construction engineers expect turnover growth to be limited to 1.5% in 2023 (compared to 3% in 2022), highlighting the difficulties in this uncertain economic environment.

However, incentives for decarbonisation in the construction and public works sectors, as well as investment in building repair and energy efficiency, continue to drive activity in the industry, raising the prospect of a strong recovery in the medium term.

Energy renovation and optimisation as a driving force in the sector

This trend is part of a longer-term evolution that accelerated in 2022 with the rise in energy prices induced by a combination of economic (rapid recovery in global output following the pandemic) and geopolitical factors (conflicts in Ukraine and the Middle East). With production costs under pressure, controlling energy costs is becoming critical for the construction industry. With this in mind, companies are focusing on future investments linked to the low-carbon transition. Contributing to this momentum, local authorities are focusing their smart city policies on energy and environmental efficiency. This trend has also been bolstered by the inclusion of energy transition in the government’s economic stimulus plan, with €30 billion earmarked for this issue. In this context, the Tertiary Sector Decree, which mandates companies to take measures to improve the energy performance of their buildings, and the BACS Decree, which requires the installation of automation and control systems in buildings, are important levers. Specialist engineers are increasingly being called upon to support transition projects in areas such as energy production, low-carbon mobility, industrial decarbonisation, energy-positive construction, and regional adaptation to climate change.

Mergers and acquisitions as a solution to the sector’s problems

Despite geopolitical uncertainties and the potential drag of rising interest rates, the engineering sector, whether in construction, industrial processes, energy or innovation, remained dynamic in terms of mergers and acquisitions in 2023.

An analysis of the year’s mergers and acquisitions reveals that many business consolidations were motivated by the need to acquire or strengthen technical skills in response to the challenges of sustainable development and improved energy performance, particularly in the fields of electrical and HVAC engineering (e.g. MYRIUM’s acquisition of DEGRE CELCIUS), BMS solutions integration (e.g. NERCO’s acquisition of ENERGIMOTIQUE), industrial diagnostics (e.g. HAGER GROUP’s acquisition of EFICIA), and low-carbon emission mobility (e.g. STELLANTIS’s acquisition of a stake in SYMBIO).

What does 2024 hold in store?

Contrasting trends will shape 2024 in different segments of the industry. Forecasts point to a 4% increase in revenue for technology consulting specialists, supported by continued corporate investment. On the other hand, construction engineering specialists are expected to see a moderate increase in turnover of just 0.5%. Deteriorating conditions in the new-build market (residential and non-residential) are likely to dampen activity in this sector. As for public works, the planned construction standstills in the Île-de-France region during the Paris 2024 Olympic Games could also contribute to a slowdown in the sector. However, these negative effects will be partly offset by demand for building renovation (housing, offices, schools, hospitals, industrial sites, etc.).

Sources: Xerfi surveys, ” Les Champions de la Croissance 2023 ” ranking by Les Echos and Statista

SOME EXAMPLES OF M&A OPERATIONS IN THE ENGINEERING SECTOR IN 2023

Buyer / investorBuyer
Country
TargetTarget descriptionTransaction type
6NAPSEFranceINFINERGIESConception & innovationM&A
ABO-GROUPBelgiqueSEGEDIngénierie environnementaleM&A
ABO-GROUPBelgiqueDYNAOPTGéotechnique / MesuresM&A
ACTIONNAIRES FAMILIAUX  / MANAGERS / NORD CAPITAL PARTENAIRESFranceROGER DELATTREIngénierie de la constructionLBO / MBO / OBO
ADFFranceNOVEXAIngénierie industrielleM&A
ALBAREST PARTNERS / MANAGERSFranceTRESCHIngénierie environnementaleLBO / MBO / OBO
ALTEROFranceHYDRETUDESIngénierie environnementaleM&A
ARDIAN EXPANSION / TIKEHAU / EMZ PARTNERS / BPIFRANCE / AMUNDI / SIPAREX  / MANAGERSFranceVULCAIN INGENIERIEIngénierie diversifiéeLBO / MBO / OBO
ASTERION / STARQUEST / BPIFRANCE / RISEFranceCAELI ENERGIEIngénierie énergétiqueCapital Développement
AZULIS CAPITAL / MANAGERSFranceADVANSConception & innovationLBO / MBO / OBO
BNP PARIBAS DEVELOPPEMENT / BPIFRANCEFranceBEMINGIngénierie de la constructionLBO / MBO / OBO
BOUYGUESFranceOREM-ASTREIngénierie industrielleM&A
BOUYGUES / STELLANTIS VENTURES / THALESFranceGEOFLEXConception & innovationCapital Innovation
BPIFRANCE / IDIA CAPITAL INVESTISSEMENTFranceNALDEOIngénierie environnementaleCapital Développement
BTP CONSULTANTSFranceBOASIngénierie de la construction / MesuresM&A
CDK TECHNOLOGIESFranceC3 TECHNOLOGIESConception & innovationM&A
CICLAD (75%) / MANAGERSFranceGROUPE VITTORIIngénierie de la construction / TravauxLBO / MBO / OBO
CREDIT AGRICOLE / UNEXOFranceHYPERION DEVELOPPEMENTIngénierie de la construction / DiagnosticsLBO / MBO / OBO
DELAIRFranceNOTILO PLUSConception & innovationM&A
DOCAPOSTEFranceAXONAL-BIOSTATEMConception & innovationM&A
DOLFINESFranceAEGIDE INTERNATIONALIngénierie HSEM&A
EFORFranceNODARIUSIngénierie industrielleM&A
EGISFranceATRIXIngénierie industrielleM&A
EGISFranceODZ CONSULTANTSIngénierie HSEM&A
EKIUMFranceFIVAIngénierie industrielleM&A
FIDEVE GROUPE / VOLTALIAFranceCHARGEPOLYConception & innovationCapital Innovation
FONDS RÉGIONAUX / BUSINESS ANGELSFranceD-ICE ENGINEERINGConception & innovationCapital Innovation
GENERSYSFranceRC3IIngénierie industrielleM&A
GEOTECFranceATEMACGéotechnique / DiagnosticsM&A
GROUPE BATISANTEFranceELIBAT (RESEAU EX’IM)Ingénierie de la construction / DiagnosticsLBO / MBO / OBO
GROUPE GAGNERAUDFranceEPPY GROUPIngénierie de la constructionM&A
HAGER GROUPAllemagneEFICIAIngénierie de la construction / Performance énergétiqueM&A
HOUSE OF HRBelgiqueABMI-RTONEConseil & Assistance techniqueM&A
IK PARTNERS / MANAGERSFranceMMSConception & innovationLBO / MBO / OBO
INDDIGOFranceTRAIT D’UNIONAménagement urbainM&A
INFRANEOFranceANTEMYSGéotechniqueM&A
MANAGERS / BPI FRANCEFranceALCADIAIngénierie industrielleLBO / MBO / OBO
MANAGERS / FAMILLEFranceGROUPE SDECConception & innovationMBI
MYRIUMFranceDEGRE CELSIUSGénie climatiqueM&A
NEO2FranceKEMTEC INGENIERIEIngénierie industrielleM&A
NERCO / SIPAREXFranceENERGIMOTIQUEGénie climatique / Performance énergétiqueM&A
OKWIND / VEOLIA / NOSHAQ / UNEXOFrancePURECONTROLIngénierie industrielleCapital Développement
PAPERAFranceECARTIPIngénierie topographiqueM&A
RGREEN INVESTFranceSWISHConception & innovationCapital Développement
SERCELFranceMORPHOSENSEConception & innovationM&A
SEVEN2 / MANAGERSFranceINFRANEOGéotechniqueLBO / MBO / OBO
SFLD / BREIZH REBONDFranceWAINVAM-EIngénierie industrielle / MesuresM&A
SOPRA STERIAFranceCS GROUPConception & innovationBourse / OPA
SPIE BATIGNOLLESFranceCIFE (COMPAGNIE INDUSTRIELLE ET FINANCIÈRE D’ENTREPRISES – ETPO)Ingénierie de la construction / TravauxBourse / OPA
STELLANTISFranceSYMBIOConception & innovationM&A
TECHNIP ENERGIESFrancePROCESSIUMIngénierie industrielleM&A
TIKEHAU CAPITALFranceEGISIngénierie de la constructionFinancement
VINCIFranceMETHALACIngénierie de la construction / MesuresM&A
WILLERMINFranceQINOMICIngénierie industrielleM&A