Face to face: Samer Khoury, CCC
Paromita Dey talks to CCC’s Samer Khoury about bagging notable projects despite challenging economic conditions
A decrease in infrastructure spending by GCC governments on the back of constantly fluctuating oil prices has posed sizeable challenges for contractors over the last year. But Consolidated Contractors Company (CCC), with a geographically diverse portfolio and over 130,000 employees at the moment, has become a frontrunner in tackling such concerns.
The Greece-based contractor was able to bag notable works in 2014, which includes the $10bn Riyadh Metro project, despite socio-economic upheavals in the region. The company is involved in more than 50 projects within the GCC, Africa, Australia, Kazakhstan, and Southeast Asia. CCC’s significant project wins in the GCC include the $3bn Abu Dhabi Midfield Terminal in a joint venture with Arabtec and TAV, $300m roadworks in Oman, and the $4bn Kuwait Oil Company’s (KOC) Lower Fars heavy oil development with Petrofac.
The company’s other overseas projects include the $800m Abu Dhabi Plaza in Astana, Kazakhstan, in conjunction with Arabtec; projects in Basra, Iraq; power plant projects in Thailand; and pipelines in Australia.
The company ranks among the top 20 contractors in the Middle East, with revenues around $5bn recorded in 2014. Samer Khoury, son of CCC’s late founder Said Khoury, and president for engineering and construction at CCC, explains how diversification has helped his firm gain solid footing globally.
“We are present in 50 countries around the world. Diversifying our portfolio is the only solution for such challenging times.
“Owing to [our] project wins, we expect our margins to improve in 2015 as compared to last year. It is still early to comment, but hopefully, we will perform well.”
Born in the north of Palestine in 1923, Said Khoury emigrated with his family to nearby Lebanon as a result of the 1948 Israeli-Arab war. In 1952, he joined hands with his brother-in-law Haseeb Sabbagh, and Kamel Abdul Rahman, to establish CCC in Beirut.
Khoury’s three sons now sit on CCC’s board and play an active role in running the company. Wael Khoury supports Samer as the chairman and president of CCC’s petroleum and minerals division, while Tawfic Khoury is CCC’s current executive vice-chairman.
“Our father pretty much handed us over the business 10 years ago, to make sure that we are on the right track,” Khoury says, adding the firm’s operations remain broadly similar despite his father’s death in 2014 because CCC’s management team is unchanged.
Challenging economic circumstances mean existing projects are suffering a lack of funds to move forward, while planned developments are nipped in the bud. Consequently, project announcements are taking more time than usual to convert to subsequent construction contracts.
“With the low oil prices, governments are [now] delaying project payments,” Khoury says.
“Clients used to have very good schemes previously, but now, most projects lack even basic advance payments. Many contract awards are delayed; the inflow is quite slow [these days], not only for CCC but for other companies as well,” he adds.
“Due to government constraints, clients are sceptical in proceeding with jobs, which creates a problem for us.”
Funding is certainly going to remain an issue until global oil prices stabilise, but contractors also face the challenge of procuring appropriate skilled labour for their existing and ongoing projects.
“It is a big challenge to retain the good quality workforce that CCC has,” Khoury says. This is why the firm takes a strategic approach to employee retention.
The company regularly organises training programmes for the existing staff, as well as fresh graduates and the labourers. Employees are given induction programmes, skill training, and health and safety training as well.
“People in general like to work with us because we are [good] paymasters and have never delayed payments,” Khoury says.
It hardly comes as a surprise when Khoury mentions the Middle East to be CCC’s best performing market, since approximately 75% of its business comes from this region alone.
Due to lower-than-expected margins in 2014, the contractor decided to concentrate on large-scale infrastructure schemes in the region.
“Currently, our strategy is to focus on heavy infrastructure projects, like railways, ports, airports, and power plants, and in the oil and gas sector,” Khoury says.
“If we want to maintain our growth and expect good margins in return, we need to focus on these market segments,” he adds.
CCC will rather develop its diversification strategy. “We believe in diversifying our portfolio geographically, and are always looking [towards] expansion,” Khoury says.
Looking ahead, CCC is set to get busy with its amply-supplied project pipeline.
“We are expecting projects with Saudi’s Aramco,” Khoury says. “There are many projects we are waiting for in Qatar. We have a project coming up for Abu Dhabi Company (ADCO) in the UAE too.
“Overseas we are expecting an LNG plant in Mozambique,” he adds.
CCC reported revenues of $5.3bn in the first six months of 2015, and has plans to grow at around 5% per year, Khoury claims.
“I want to increase [CCC’s] volume of work outside the Middle East to try and reach a 50:50 balance in our portfolio. It’s to diversify the risks, and not have to be fixed in one region,” he concludes.