Eva Analysis of the Building Materials Sector in the Global Construction Industry

Abstract

One of the major challenges facing the global construction industry is the lack of productivity. The data from Euromonitor shows that productivity of global construction industry has declined from $17,516.1 USD per person in 2000 to $14,744.5 USD per person in 2018. This has been one the reasons for the under-performance of the industry as a whole. The only sub-sector in the global construction industry generating positive economic value added (EVA) is the building materials sector. This research tries to understand and analyze the reasons for profitability of the building materials sector. Some common trends are followed by the industry viz. high correlation between net income and total equity and eventually return on equity (ROE). However, there is no correlation between total debt and ROE. This means that in spite of taking high debt the companies are not able to generate high returns for the shareholders.The research goes on to give specific insights about the excellent performance of the building materials sector which can be implemented by other companies as well.