Face to face: Hamish Tyrwhitt, Arabtec Holding
Hamish Tyrwhitt outlines his long-term strategy to expand Arabtec Holding’s presence and market share in the UAE, and beyond
If the Middle East’s most influential construction leaders were to be judged by their achievements, then Hamish Tyrwhitt would stand out for the steady growth trajectory on which he has set his organisation.
Tyrwhitt, in April and November 2016, was named group chief executive officer (CEO) of Depa Limited and Arabtec Holding, respectively. He has been at the centre of a quiet but impactful campaign that has turned around the fortunes of both firms.
Dubai-listed interior solutions group, Depa Limited, posted a net profit spike of 195% for 2017, climbing to $41.8m (AED153.6m) from $14.2m (AED52m) in 2016. Meanwhile, the firm’s 2017 revenue rose by 4% to $490m (AED1.8bn) from 2016’s $460m (AED1.7bn). In September 2017, Depa paid its first ordinary dividend since 2010.
Arabtec Holding has also been on the up since 2017. Shortly after his appointment in November 2016, the company announced it had adopted a three-year Strategic Roadmap that was introduced by Tyrwhitt in January 2017. Around a year ago, the group announced its first quarterly profit since 2014: in May 2017, the UAE-headquartered construction giant reported a net profit of $4.9m (AED18m) for Q1 2017, a $17.4m (AED64m) increase compared to the net loss of $12.5m (AED46m) recorded during the corresponding period of 2016.
Earlier this year, Arabtec Holding revealed that it ended 2017 in the black, with $33.5m (AED123.1m) in net profit. According to the company, its revenue for the 12 months ending 31 December, 2017, reached $2.5bn (AED9.1bn), while its backlog stood at $4.7bn (AED17.2bn).
Arabtec’s 2017 performance was a remarkable improvement over the 2016 financial year, during which the group recorded a net loss of $925.62m (AED3.4bn). Last year also saw the company and its subsidiaries winning work on notable developments across the UAE, such as Wasl Tower, Akoya Oxygen, and Expo 2020 Dubai’s UAE Pavilion.
First-quarter results have been even better this year, with Arabtec Holding announcing a net profit of 261% for the period. Net profit amounted to $17.3m (AED63.6m) in the first quarter of this year, which is more than thrice its Q1 2017 net profit, worth $4.8m (AED17.6m). Revenue during the quarter amounted to $653.4m (AED2.4bn) – 10.7% higher than corresponding 2017 figures – with Arabtec’s backlog valued at $4.4bn (AED16.2bn).
The construction behemoth revealed that it also has a pipeline worth $4.35bn (AED16bn) of “tenders submitted, or under preparation” in its primary market, the UAE.
Arabtec Holding’s turnaround is self-evident, but an amused Tyrwhitt only hesitatingly agrees when asked if he feels ‘comeback king’ is an appropriate term to describe his role at the company. “I would love to be able to take the credit, but the reality is that construction is a team sport,” he tells Construction Week.
“We’ve all worked together [and been] very focused on achieving results and creating a culture of accountability […and] performance. Certainly, both Depa’s and Arabtec Holding’s teams have stepped up to that. So it’s an honour – it’s humbling being called [the comeback king].
“[And] I much prefer it to a lifetime achievement award, which made me feel old, so this is alright,” Tyrwhitt adds, alluding to the Lifetime Achievement honours that he received at the Construction Week Awards 2017.
Arabtec Holding’s balance sheet continues to look better each quarter, but Tyrwhitt is continuing his relentless pursuit of long-term growth for the construction company.
“Yes, we’ve had a positive month, but we’re announcing things […] that happened last year, so for us, it’s not about rushing to things, it’s about continuing to take more steps forward than backwards,” he explains.
“We have a very clear strategy and plan, [and] a whole team of people who are just focused on delivering that plan. I think the positive thing for us is [also] that we’re trading into a positive market – [the sentiment is] delivering a really solid, addressable market for us, and the largest driver for that is Expo 2020 Dubai, which is creating opportunities both on the expo site but also throughout the UAE and the region.”
Tyrwhitt is focused on capitalising these opportunities, but is also working to ensure that any projects the company works on are in line with the group’s future plans. Identifying the group’s key challenges was one of Tyrwhitt’s primary responsibilities when he took over.
Speaking at Arabtec Holding’s annual shareholder meeting in 2016, chairman HE Mohamed Al Rumaithi said the company would streamline its activities, adding: “We are a construction company, we will concentrate on our core business [of] construction.”
Group CEO Tyrwhitt agrees with the view, stating that winning work is “not difficult”, but the true test lies in delivering the scope and “making a cashback profit”.
He continues: “Growth for growth’s sake is a mistake that many companies have made through their lives, and to grow a business focusing on your core competencies – whether that is a geographic market or […] a sector – is what’s required.
“When we first looked at Arabtec – [and] the same was the case with Depa – we had scattered ourselves too thin.
“When you do that, you lose the span of control. We’re a people industry, so we need to have people that deliver in accordance with the company’s values, and [meet] the company’s expectations, as well as those of our customers and clients,” Tyrwhitt says.
This philosophy drove the company to “regroup around the core competencies” and geographic markets, as well as the clients, that it could confidently deliver to, he explains: “It’s all pretty basic, the things that we did.
But what my chairman said two years ago, was correct. That was my mandate – to refocus the business on its core competencies [and] in its core markets, and to deliver a long-term, sustainable profit. That’s what we’re working on.”
Already, the impact of Tyrwhitt’s vision is visible on the company’s performance and direction. In April, it was announced that Arabtec Holding’s subsidiary, Arabtec Engineering Services, had been awarded a $117.8m (AED433m) contract by Dubai Municipality for the DS188 Jebel Ali Industrial Sewerage and Drainage System.
This, after Arabtec Construction – another subsidiary – was appointed by Modon Properties as the main contractor for its Show Village project in Khalifa City. The company also divested its 14.6% stake in Jordan Wood Industries during in Q3 2017.
Tyrwhitt says the divestment decision was driven by the group’s efforts to refocus its resources: “We are not a fund manager, a hedge fund, or an investment vehicle – we’re a construction company, so we can only influence outcomes if we can control [the factors].
“It’s very important for us to have a controlling stake [through which] we can work on the synergies between the different business units, [and] the people we’ve got, and get the synergies and value from the shared services across the group. So having minority stakes in investments and other assets isn’t a fit within the Arabtec group.”
This focus is also benefiting Arabtec Holding’s subsidiaries, which Tyrwhitt says is achievable by “understanding truly what our value proposition is as a business”, as well as reviewing what the company does best.
Doing “everything”, he explains, isn’t necessary – but identifying the addressable market ahead, as well as studying its foreseeable tendering opportunities, should be a priority.
“Then, we’ve got to get the right people to be able to deliver against the opportunities that are there [in the market],” he continues. “The other thing that we need to do is have basic plans. Most of us are engineers, so we like following instructions [and] a path – we like having plans and specifications.”
These plans, Tyrwhitt explains, cover not only job targets that his team would like to win, but also to ensure that the company has “the people ready to go on to those jobs”. This approach is part of Arabtec’s 4-Gate Work-Winning Process, aimed at controlling the risks related to the company’s commercial and contractual commitments, as well as project completion.
The mandatory procedure allows Arabtec to “optimise the commercial costs of the organisation, to support a tender decision-making process based on objective risk information, and to ensure that contractual commitments are in line with the organisation’s objectives and its defined risk appetite”, the group’s 2017 Annual Report reveals.
Arabtec Holding’s geographic focus is also influenced by similar discussions about opportunity and capability. The company has a market share of 6% in the UAE, and Tyrwhitt says that Expo 2020 Dubai is generating “more than enough opportunities” for the company to bid in its domestic market.
“Right now, in the UAE, we have more opportunities to tender and to win than we require to meet our growth expectations,” he reveals, adding that he is very optimistic about the country’s construction market. “Another thing we’re looking at [right now] is following our clients from the UAE to other markets. So we will follow our clients to the other markets they go to.”
The UAE government will also be a key client for Arabtec, which is already working on the $1.1bn (BHD414.1m) Bahrain International Airport project that is partly funded by the Abu Dhabi Fund for Development, a public-sector organisation in the emirate.
“So we [will] go to regional markets, but with clients and customers that we have a relationship with, and that we’ve delivered with before, [because] we know how they operate.”
Outside the UAE, Tyrwhitt is optimistic about Saudi Arabia, which he says he is “watching with great interest”, expressing confidence in the country’s Vision 2030 plans, launched by Crown Prince HRH Mohammed Bin Salman. Additionally, the company is working for Eagle Hills’ Saraya Aqaba project in Jordan, and the St Regis-branded hotel and apartments in Oman. Tyrwhitt reveals that the company is also bidding on work in Bahrain.
And last week, Arabtec Construction announced that it had been awarded a $43m (AED157m) contract for the Uptown Cairo master project from Emaar Misr. The contract comprises the construction of Phases 3 and 4 of Village E Levana within the Egyptian master planned development.
“We can see a short-term positive market, [and] longer-term positive trends and drivers in the region,” Tyrwhitt adds.
“We will remain focused mainly on the GCC, but also [look at] Egypt and other countries, potentially in North Africa.
“I think the sector is incredibly resilient. We have no control over [external factors], but it’s our ability to navigate through those issues, if they have an impact on us, that’s important. We have a visibility of a really good market at the moment, and we will tender for work. Hopefully, we’ll win our share […], and if we do, we will focus on delivering those jobs.”