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Some Australian industries are set to fly in the new financial year, others to fall. Where does your business lie?


As Australian companies move into the new financial year, business information analysts at IBISWorld reveal the industries set to flourish and those set to flounder over the next 12 months.

While some industries are preparing for a boom year, others may have to limit their expectations.

Changing priorities within government departments and the private sector will influence industries’ performance in the new financial year.

So who’ll smile? Who’ll frown?

Which Australian industries are set to fly?

Oil and gas extraction

Australia’s liquefied natural gas (LNG) producers have worked hard to increase capacity in the face of growing demand from Asian markets, particularly Japan.

Following the Fukushima Daiichi nuclear disaster in March 2011, Japanese energy suppliers converted to gas-fired plants. Australian LNG producers are well-positioned to cater to this soaring demand as production rises and export capabilities increase.

Production growth will be driven by natural gas projects off the coast of Western Australia, including the Gorgon, Wheatstone and Prelude projects. The Gladstone LNG project on Queensland’s Curtis Island can convert coal seam gas into LNG and began exporting in early 2015.

Child care services

Growth in female workforce participation and strong government support for childcare providers through the Child Care Benefit and Child Care Rebate are projected to support industry revenue growth of 12.2 per cent in 2015-16, continuing a robust growth trend.

Demand for childcare services continues to expand, as more and more families become dual-income households and enrol their children in childcare.

Beef cattle farming

Strong foreign demand for Australian beef and strong saleyard beef cattle prices are forecast to drive revenue growth of 11.0 per cent for the beef cattle farming industry in 2015-16, continuing its strong momentum.

This growth comes despite a forecast decline in live cattle exports for the year as Indonesia, Australia’s biggest live cattle export market, imposes stricter import quotas.

Funds management services

Fund managers generate revenue through their returns on managed assets and the fees generated on these assets.

The presence of cheap debt, higher levels of wealth and a return to strong performance in equity markets following a low in late 2014-15 are expected to contribute to a positive year for fund managers, with revenue growth forecast at 10.6 per cent for 2015-16.

Data centres

The growth of cloud computing and increased data usage are projected to result in a boom year for data centres. Limited floor space and weight loading in office buildings prohibit the expansion of in-house servers.

As cloud computing becomes a more cost-effective means of expanding server space, businesses are expected to continue outsourcing their servers to external data centre operators.

Which Australian industries are set to fall?

Ceramic product manufacturing

The new financial year will mark the first full year of the ceramic product manufacturing industry’s operation without GWA Group Limited, formerly the industry’s largest player. GWA Group has moved their entire ceramic product manufacturing operations offshore.

This is indicative of the long-term trend afflicting manufacturing industries, as they have struggled to compete with low-cost imports from Asian countries that have lower wage costs and greater economies of scale.

Credit unions and commercial banks

Credit unions and commercial banks generate revenue based on the size of their lending books and the interest they receive on these lending books.

Historically low interest rates are expected to result in significantly lower revenue generated on the loans held by institutions within these industries.

The RBA reduced the cash rate by 25 basis points in both February 2015 and May 2015, and these rate cuts were passed on by credit unions and the banks.

Site preparation services

Reduced investment in new mining infrastructure, as the resources boom moves from an investment phase to a production phase, will be detrimental for the site preparation services industry in 2015-16.

While investment in mining infrastructure is falling as the sector begins to generate returns from completed projects, weakening commodities prices are discouraging further investment in infrastructure.

Machinery and scaffolding rental

Demand for machinery and scaffolding rental relies on demand for heavy construction in mining and infrastructure projects.

While demand from residential and non-residential building construction is expected to maintain stable growth, the drop-off in mining investment will negatively affect the industry.