Falling Net Profit MarginsCompression in net and operating margins suggests rising operating costs, lower project margins, or mix shifts to lower-margin work. If persistent, lower profitability will reduce retained earnings available for reinvestment, weaken returns on capital, and constrain ability to finance growth internally.
Higher Financial LeverageElevated leverage increases fixed interest obligations and reduces financial flexibility. In an asset-services business where contract timing and working capital can vary, higher debt amplifies downside risk during project delays or weaker cash-conversion periods and may limit strategic investments.
Weaker Free Cash Flow ConversionA decline in free cash flow, even with decent FCF-to-net-income, signals strain in turning accrual profits into spendable cash. Persistent softening of FCF constrains dividends, debt repayment, and funding of growth initiatives, making the company more reliant on external financing or tighter working capital management.