Arabtec chief says a shake-up is on the way
A major shake-up of Arabtec’s management is under way as part of its restructuring.
Hamish Tyrwhitt, the new chief executive who was appointed last November, told The National that “by two-to-three months’ time, probably 60-70 per cent of my direct reports will be new to the company”.
“I’ve already put in one of five regional directors to replace someone that had retired. I’ve got a CFO [chief financial officer] joining in two weeks who is a very experienced CFO with published companies who I have worked with for a long time [and] is going to be a terrific asset. Two other operating company MDs [managing directors] are on their way, a COO [chief operating officer] and a few other people.”
He said that the shake-up had not involved widespread sackings, and in many cases is merely replacing acting heads or roles that have been vacant.
“The CEO role at the holding company had been an acting role for over two years, the CFO role had been acting for over two years, the general counsel role has been an acting role for over two years, Efeco [its MEP subsidiary] hasn’t had an MD for, I think, 18 months.”
The company is also in the process of a strategic review to offload a number of investments and subsidiaries. Already accounts filed last week show that it disposed of an investment in Powercon Switchgear – a company that had net assets of Dh3.6 million – for Dh1.
It also de-recognised accounts for four subsidiaries in Saudi Arabia that had been up for sale for more than two years on the basis of a “discontinuation of major operations”. The subsidiaries were run as a joint venture with Saudi Binladin Group.
Mr Tyrwhitt said that although this joint venture “is not dormant”, it is one which is not likely to be active until Saudi Binladin can resolve its own cash flow issues.
“But providing that Binladin is still there, then we would do that,” he said. Although Arabtec has its own, 100 per cent-owned contracting entity in Saudi Arabia, Mr Tyrwhitt said this is “not a market that we are going to put a huge investment in” in terms of bidding for new work this year.
Instead, it plans to raise money through disposals, and to reinvest this on building other parts of the business, including a greater focus on infrastructure. He said that 75 to 80 per cent of current bids were for opportunities in the UAE, which matches its current revenue profile.
He said that there were a number of investments held by the company, including shares and minority stakes.
“We’re not an investment company, we’re a construction company. Once we’ve had a strategic review, I’d be looking at recycling that capital into the core of the business.”
He said the push into infrastructure it has identified as an area for growth can be done through existing companies, and with both existing and new management.
“All of the managers coming in have that ability.
“But even the employees – I can pull together thousands of people who have done heavy infrastructure projects. If you look at Midfield Terminal – that’s one of the most complex infrastructure projects ever undertaken. [Look at] Burj Khalifa – if you can build the Burj, you can certainly build a bridge.”
Nishit Lakhotia, an analyst with Bahrain-based Securities & Investment Company, said that Arabtec has already changed its management team several times during the past five years.
“We hope to see some stability now post this restructuring,” said Mr Lakhotia.
He argued that the disposal of non-core assets was a priority given that Arabtec is currently in a position of negative equity.
The company’s audited accounts filed last Wednesday showed that it declared a Dh3.4bn loss as it wrote off Dh1.9bn in impairments.
Mr Lakhotia said that he hoped for an improved performance from the business given the scale of its most recently announced losses. “That they have taken everything in one quarter, now they want to start afresh, do this rights issue, start executing projects and show some profitability.”
Mr Tyrwhitt said that he had been chosen by the board to take over the company “based on a track record of doing it successfully in the past in other countries”.
He also pointed to the turnaround that has already begun at Dubai-based contractor Depa, where he was appointed as chief executive in April last year. His subsequent appointment to the dual role as chief executive at Arabtec (which is Depa’s biggest single shareholder, with a 24.3 per cent stake) came after demonstrating three quarters of profitability.
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