Is the recession hurting AEC IT?

Has the global financial crisis and the knock-on effect it’s had on the construction industry begun to hurt ICT providers? It looks like it. Looking this morning at, for example, I saw results announcements from Tekla and Deltek.

Tekla’s 2008 results show the business achieved 2008 sales at broadly the same level as 2007, while the final quarter was about 4% down on the corresponding quarter last year. President and CEO Ari Kohonen says:

“Sales in our main business area, Building & Construction, developed with some difficulty after the favorable first quarters. … Of B&C’s main markets, development was negative in the Nordic countries and the United Kingdom due to the recession in the construction industry. …

“The economic recession will continue for the time being, and its duration is unknown. Operating result will be clearly lower in 2009 than 2008. The beginning of the year is challenging in particular….”

Deltek had a record year in 2008, achieving total revenues of $289m, but the revenues in the final quarter were also down on the previous year’s, reflecting what Kevin Parker, Deltek president and CEO, described as “increasing economic uncertainty“.

I will monitor the results of other AEC IT firms with interest over the coming weeks.

Update (18 February 2009): Avatech (according to was “negatively affected by the downturn of the national economy” in the final quarter of 2008, reported revenues of $9.5 million, compared to $12.9 million in the prior-year quarter.

Information Age reports a TechMarket view that the combined revenues of the UK’s software and IT services companies will shrink by 3% in 2009, and that the sector will continue to shrink until 2011.


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