Water conservation measures are curtailing usage, but the industry still requires revenue to support its capital base
Melbourne, Australia (PRWEB) May 25, 2012
The Water Supply industry in Australia is expected to generate revenue of $9.87 billion in 2011-12, growing an annualized 9.3% over the past five years. Although severe drought conditions reduced water consumption during much of this period, the effect of this dry spell on revenue was more than offset by substantial increases in water prices. According to IBISWorld industry analyst Kate Convey, “industry revenue is forecast to expand by 10.7% in 2011-12, as prices are increased well ahead of inflation”. Higher revenue is required to maintain existing industry infrastructure (much of which has been put under additional strain by protracted dry conditions), fund ongoing infrastructure development and to develop new water sources. Although low rainfall and drought conditions in several states have curtailed growth in the volume of water supplied by the industry, its infrastructure spending requirements continue to grow, requiring higher revenue, and in turn, higher water prices.
The Water Supply industry is dominated by state government-owned corporations, but public-private funding mechanisms are becoming more commonplace for large infrastructure developments, including major water treatment plants and desalination facilities. “The Water Supply industry is highly concentrated within each state, with only a small number of government-owned organisations accounting for the great bulk of operations”, Convey said. However, over the country as a whole, the market share concentration level is moderate. Industry concentration has remained stable over the past five years. Major companies in the industry include Water Corporation, Sydney Water, South Australian Water, Yarra Valley Water and South East Water.
The next five years will be challenging for the Water Supply industry, given the trend towards less reliable rainfall and the need to develop alternative sources of water, including desalination plants. Industry revenue is expected to increase and industry participants will require robust profit margins in order to provide for capital spending.
For more information, visit IBISWorld’s Water Supply report in Australia industry page.
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IBISWorld industry Report Key Topics
Firms in this industry catch, store, purify and supply water, usually via a system of pipes. Firms that operate irrigation systems supplying water to farms are also included in the industry, but the on-farm operation of irrigation systems forms part of the Services to Agriculture industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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