Change for success: Hamish Tyrwhitt, Arabtec Holding CEO
In November 2016, Hamish Tyrwhitt was appointed as the group CEO for Arabtec Holding and entrusted with the task of turning around the fortunes of one of the UAEs biggest contracting companies. After facing a string of losses for consecutive months, a streamlining of operations was needed to bring around the companys financial performance to green. And Tyrwhitt got into action from day one itself.
He remarks: When we look in the region, we have been involved with the construction of some of the incredibly iconic projects, not just in the UAE but the entire GCC. We went back to our basics and started focussing on what we are good at being a contractor. Its an ongoing process and our project selection is based on our capabilities in our core sectors in key geographical markets.
A part of the process began with disposing some of the non-core assets. Tyrwhitt points out: The reason why we disposed some of our non-core assets was because they were immaterial for the future of the company. They werent delivering the kind of results that would contribute positively towards our portfolio. So, the non-core assets that we have disposed was not a part of our future.
The company returned to profitability in 2017 as it recorded AED123mn net profit for the year as compared to AED3.4bn losses in 2016. Revenues also grew in 2017, reaching AED9.14bn, an increase of 12% year-on-year. Tyrwhitt says that companies dont go from huge loss to profitability with immediate changes. The quick answer is that we have changed everything; the whole way we approach the market from tendering to delivering the projects – the focus that we have got on our performance, accountability, and company culture. The company is going back to the culture it had in the 90s focus on being a construction major.
The industry, as a whole, lags in innovation; its something that is disappointing. A lot of our business plans in 2018 will focus on productivity, innovation, and efficiency. We have to be more relevant and efficient. If companies dont evolve and differentiate themselves from the competitors, there is no sustainable future. So, we see it as our duty to ensure that we innovate regularly.
Watch excerpts from the interview here.
Last month, the construction unit of Arabtec Holding won an AED424mn contract from Dubai-based developer, Damac Properties, to build 916 villas at the Akoya Oxygen project. Emirates Falcon Electromechanical company, another Arabtec subsidiary, will carry out mechanical, electrical, and plumbing work for the project. The project entails construction of units in phase six of Damac’s Akoya Oxygen master development, comprising a built-up area of approximately 148,000sqm. Work commenced in March and will take 22 months to complete.
The same subsidiary is also working on Dubai Properties Villanova project, where the contractor is constructing the projects Amaranta and La Quinta phases. The project works are supposed to be completed within a schedule of 28 months. Tyrwhitt says: Across the group, we have a portfolio of almost 100 projects. One of the most significant ones that we have handed over in the last few months was the Louvre Abu Dhabi. We are working on villas from Fujairah to Yas Island in Abu Dhabi and with well-known developers like Dubai Properties, Aldar, Emaar, and Damac. So, our portfolio is pretty evenly spread across the residential, commercial, and socioeconomic infrastructure.
The contractor is also working on the AED416mn contract to build the UAE Pavilion at the Expo 2020 Dubai. The 15,000sqm pavilion will be located opposite Expo 2020 Dubais central Al Wasl Plaza. The upper floor of the pavilion spans an area of 2,000sqm while the mezzanine floor will have an area of 662sqm. The ground floor, with gardens and parking spaces, sprawls over 13,300sqm. Another 3,000sqm will be set aside for a plaza level and related facilities. The pavilions design and construction aim to achieve the highest Leadership in Energy and Environmental Design (LEED) rating.
In a joint venture with Consolidated Contractors Company (CCC) and TAV Construction, Arabtec Holding is working on the Abu Dhabi Midfield Terminal. Tyrwhitt mentions: The Midfield Terminal will be completed in June 2019. Its a significant project for the region as well as for Abu Dhabi. We are totally focussed on ensuring that its a success for all stakeholders. The project is now progressing very well.
But all has never been rosy for the contractor in Saudi Arabia. Tyrwhitt remarks: The projects that we work on are sometimes being done directly as Arabtec Holding or through our other operating companies. In some of the countries that we operate, we work in joint ventures (JV). In Saudi Arabia, we entered into a JV with Saudi Binladin for jobs, but those didnt materialise in the end.
Everybody is aware of the various challenges that are taking place in the Saudi market. Further, when we take up more jobs in KSA, we will simply go forward as Arabtec and not necessarily with any JV partners.
But Tyrwhitt believes that outside of the UAE, Saudi Arabia is the [most] exciting market for Arabtec presently. The contractor is working on some key projects in Saudi Arabia, including the 380 villas for Saudi Aramco, that they handed over recently.
While restructuring still continues, Tyrwhitt says that the goal towards a brighter future is clear. We need to have the right people at the right time for the right projects. We cant have people that are holding us back for the necessary evolution; to put it in simple words, change or be changed. I want to ensure that we get the right people in to deliver the work. As a company, we would not have been able to achieve what we have achieved in the last 12 months if we didnt have the right people on board. One of the first things that we worked on as a team with the support of the board was ensuring that we have the right people in place.
There will always be changes and evolution. We are constantly dealing with transition and changes in expertise. Currently, we have a great team in place and not flagging any major changes in the near term.
Divestments are an important part of the strategy and as Tyrwhitt mentions: Change never stops and any step that is taken is always towards the betterment of the company.
He opines: There will always be divestments; people sometimes ask me when is change going to stop? If companies dont continue to evolve and make themselves relevant, they go extinct. We are constantly looking at opportunities to grow organically and also to potentially divest when the time is right. In our portfolio, we want to have operating companies which has the ability to win and secure profitable projects.
Selecting the right projects will always be a priority, Tyrwhitt says. Our backlog is just over AED17bn. The whole construction sector has a lot of work to do in collecting receivables and that remains a major focus for us as well. Going forward, we will be focussing on clients who pay us on time.
In addition, the contractor also wants to focus on the right customers in 2018, to whom the company can provide quality professional services. Tyrwhitt concludes: The key markets for us will be the UAE, KSA, Bahrain, and Egypt. Overall, the UAE will always remain the main market for us to bid and deliver work.