Low Profit MarginsRelatively thin margins limit the buffer against cost overruns on fixed-price contracts and reduce retained earnings for reinvestment. In a capital-intensive engineering business, persistent low margins constrain ability to scale, invest in R&D, or absorb shocks without eroding returns.
Declining Free Cash Flow EfficiencyA drop in FCF efficiency signals weaker cash conversion from reported profits, which can pressure liquidity and limit funding for backlog execution or growth initiatives. For project-based firms, worsening FCF metrics increase working-capital strain and can raise funding costs over time.
Negative Recent Revenue GrowthA near-13% year-on-year revenue decline reduces scale benefits and can magnify fixed overhead per project. Sustained revenue contraction risks margin compression, weaker bargaining power on contracts and potential underutilization of capacity, undermining medium-term earnings stability.