Growth trajectory

Thrasos Thrasyvoulou
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Turnkey MEP contractor Al Habtoor-Specon is showing strong growth despite the downturn. MD Thrasos Thrasyvoulou explains why.

The company doubled its turnover from 2008 to 2009, and has enough projects in hand “to grow 50% this year as well. Our strategic planning for the next three years is based on a growth rate of 25% a year, based on our projections and the specific jobs we are being called to tender on. This is reasonable growth under the circumstances,” says Thrasyvoulou. “Our aim is to get involved in projects with other major contractors in the region and abroad, and to have exposure to a broader client base.”

An indication of just how fast the market has changed is that when MEP Middle East spoke to Thrasyvoulou in July 2009, he was confident that the company was well on its way to an impressive AED2 billion target. “We have not achieved this level because of the downturn, especially in Dubai, where a lot of projects have been postponed or redesigned, which will affect cash flow for a long period. In the interim we have become an AED1 billion company, and our immediate plan is to reach the AED1.5 billion level,” says Thrasyvoulou.

Al Habtoor Engineering and Specon Limited signed a memorandum of understanding (MoU) in October 2005, with the partnership registered officially in July 2007. Both parties were already highly credible and experienced players in the market, so it was an auspicious beginning for the new company. The immediate result was “tremendous growth within a short period of time,” says Thrasyvoulou.

This was due to the complementary nature of the two parties, together with their well-established presence. “The second factor that contributed to quick growth was the pipeline of projects available to us immediately through Al Habtoor Engineering. This was a boom time for contractors, who were in search of reliable and qualified MEP specialists to do an almost impossible quantity of work in terms of the timeframes and demands of the industry,” says Thrasyvoulou.

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Initial success

The initial success was also largely due to the vast experience in MEP of the combined core team, which had garnered 20 to 25 years’ experience prior to Al Habtoor-Specon arriving on the scene.

“Most of the senior personnel were part of an earlier establishment led by myself,” says Thrasyvoulou. This also helped to mitigate the impact of the global downturn in late 2008. “In fact, due to the pipeline available with our partners, the downturn in the area, and specifically in Dubai, has not affected the growth of Al Habtoor-Specon as much, though the growth would have been higher if there had been no downturn, of course.”

Thrasyvoulou says diversification was a conscious strategy right from the beginning. “Even though our project pipeline was big enough to sustain us during the immediate shock of the downturn in this area so that we kept on growing, I have always been a firm believer in not keeping all your eggs in a single basket. So at the time of the downturn we only had about 20% of our business in Dubai, and were not heavily affected.”

This was due to geographic diversification, as “you do not want to be in one area only.” As a result the company “expanded cautiously and steadily,” moving into Abu Dhabi and Qatar. “Geographically we are now tendering for projects in Saudi Arabia, Kuwait, Bahrain and Oman as well, and other areas where we hope to get business in order to diversify our portfolio.” Then there is diversification of specialisation. “We began as an A-Z turnkey contractor, with the traditional scope of HVAC, plumbing and sanitary, electrical and BMS. We also had a lot of experience in MV and HV substation work and transmission lines.”

Hence an energy and power division was formed, culminating in the signing of a MoU to enter into a consortium with VINCI Energies of France “to participate in and execute projects in Qatar for MV and HV substations. The prequalification and representations to the relevant ministry have been completed, and we are in line to obtain documents for the first tender. This three-billion Qatari Riyal project will increase our works in hand substantially,” says Thrasyvoulou.