Down under to on top
Al Habtoor Leighton's Laurie Voyer discusses the merger's successes
Overseeing a vast construction group forged from a merger during Dubai’s boom years is difficult enough – more so if the emirate of your headquarters is in a slump. But this was and continues to be the challenge for Laurie Voyer, managing director and CEO of Al Habtoor Leighton, who celebrated the one-year anniversary of his appointment in September.
A month after his official appointment last year he told Construction Week how the Middle East had fascinated him so much as to draw him away from his native Australia, how he relished the pressure of the task and how the construction industry worldwide “continues to function like a roller coaster”.
Today, Dubai-based Al Habtoor Leighton may have the capacity needed to succeed as the environment stabilises and new areas of opportunity unfold, particularly as it has one of the most extensive networks of subsidiaries and disciplines on the market.
“We’ve formed a diversified group with the Al Habtoor Leighton brand and created a multi-discipline builder, from piling to fit out and all in-between,” Voyer says, sitting in the company’s office close to Dubai International Airport.
It sounds simple, but the many arms of the company that bear the names of the two firms may take some explanation. The merger in 2007 brought together Al Habtoor, a company deep in the fabric of the UAE with a long client list across the Gulf, and the Arabian operations of Leighton, one of Australia’s biggest and most innovative contractors.
Leighton Holdings paid AU $870 million for a 45% stake in Al Habtoor Engineering, boasting $4.4 billion of total work in hand with predicted earnings of $2.75 billion for 2007-2008.
Al Habtoor’s building arm, Al Habtoor Engineering Enterprises, was moved into the resulting group, which provides direction for its four operations divisions: Al Habtoor Engineering Dubai, Al Habtoor Engineering Abu Dhabi, Al Habtoor Engineering Qatar and Gulf Leighton.
Then there is another substantial division, which comprises the aforementioned “all in between”: Al Habtoor Associated Businesses. This contains specialist lines in foundation engineering, MEP, steel fabrication, interiors, asset management and plant and machinery.
“We’re an integrated supplier and so we can build anything,” he says. “That means that anything we do will be market-driven; we’re responding to the market.”
The market in this sense covers the whole region, and the response is defined by where, and which, projects are being planned. Voyer is itching to diversify the company further in both geography and project-type.
In terms of projects, the range of engineering challenges was always a mainstay of Al Habtoor Engineering pre-merge. Burj Al Arab and Jumeirah Beach Residences were two key projects that it worked on during Dubai’s rise.
Its influence in the emirate was confirmed last month when the company announced the AED 700 million contract to complete the delivery of Daman Investments’
‘Buildings by Daman’ project in the Dubai International Financial Centre. This follows the swift work the company is executing on the US $4 billion Dubai Pearl.
In terms of geography, projects in Doha and Egypt, and plans to work in Oman and Libya are just the start of a greater presence outside the UAE. Al Habtoor Leighton has made clear its ambitions in the Iraqi market, and it is still mulling the establishment of an office in the country, possibly in Basra.
Voyer told reporters earlier in the year that the company would reduce its forecasted earnings derived from the UAE down to 50%, from 80%. Has the construction momentum really shifted so significantly to fellow GCC states, despite the continued progress in Abu Dhabi?
“I think we’ve started to see it,” he says. “The answer is, yes, we’ve started to conceptualise more to Saudi Arabia and Qatar. No one could have anticipated the last year and the adjustment, in looking at those markets, had to be made. At the same time we’ve reinforced our people in Abu Dhabi.”
Part of the spur to reduce the emphasis on Dubai has been as a result of a difficult year.
Though the company competed for contracts on a number of different fronts, Al Habtoor Leighton’s name came up repeatedly as one of the contractors that had suffered losses on the back of cancelled contracts – in particular for the suspension of the US $1.6 billion Tameer Towers project in Abu Dhabi, and the suspension of the Trump Tower in Dubai. But other projects arrived, such as a major water infrastructure deal in Qatar.
Expanding out from Dubai has also entailed a change in emphasis: less tall buildings, more work in community projects and infrastructure. “We’re not seeing as many big buildings, but we are not particularly concerned with that, or whether we’re able to grow the business in that specialism in other places, as the type of building depends on the market.”
The company won its first contract in Saudi Arabia in May 2009, a US $693 million contract awarded in partnership with Saudi Arabia’s Al Rahji Engineering for the first phase of Riyadh’s Information Technology and Communication Complex.
A top project, but Voyer is under no illusions as to the scope of the challenge to establish a presence in the market and get close to the major deals.
“Of course, Saudi Binladen will take up a lot of the market share in Saudi Arabia, but we are an observer in that market and are keeping a watchful eye.”
But Kuwait, he adds, has also muscled in on the company’s regional strategy, and it has already won a number of contracts in the country, as well as a preliminary agreement for work on an airport, believed to be around $500 million in total. In fact, airports is another target area for the company.
Talk of big buildings, or rather the lack of them in today’s construction plans, leads Voyer on to another change he has planned for the company.
“Al Habtoor Leighton is established here in the market for general buildings, though I think there is also scope to develop our name in civil engineering,” he says.
“There might be more jobs in this field than in buildings. In future years I’d say we might be perhaps 70% to 30% for civil jobs rather than buildings.”
One of the stand-out project wins in this area has been the AED1.4 billion contract to build on-site facilities and 47 buildings at the colossal Khalifa Port Industrial Zone, a project that has gained great publicity this summer as the UAE capital continues to expand its business facilities.
With the deal secured and announced last July, the project will test the company’s building and problem-solving skills, as it will see the firm eventually provide all associated infrastructure works, including road networks, bridges, utility installations and hard and soft landscaping.
The company’s subsidiaries are likely to be vital to these new tasks, and Voyer says the firm is always keen to leverage their abilities within the group.
“There are economic reasons for our other businesses, of course. We contract to our own MEP business half of our projects. In this sense we can make sure the quality is there and make sure there is the workforce and are capable from a delivery point of view.”
Delivery has been Voyer’s strong point. Prior to his move to Dubai he was deputy managing director for Leighton Contractors, the flagship company of Leighton Group, and helped drive significant growth for the company during that time.
This included his overview of the company’s construction and mining operations across Australia and New Zealand. Indeed, he tells CW that the mining side is one of the key specialisms that Leighton brought into the Gulf that could be fully realised with the merger with the Al Habtoor Group.
In his time in the GCC so far, not too much has surprised him. He notes that the fundamentals of construction are the same here as elsewhere, and brushes off the suggestion that the structure of contracts is any different – which has been flagged as an issue for some foreign contractors.
For the future, he maintains that the company has the means to raise money from shareholders and banks if it wishes, particularly as the expansion in the region means new offices.
“We have three shareholders and the company can be self funding. However, it’s not actually too expensive to move into new markets as the big expenditure is people costs – human capital.
Last year’s planned IPO for the Al Habtoor Group is still on hold, and Voyer had already stated this would have little impact on Al Habtoor Leighton. But he says the year has gone as well as could be expected, and is even circumspect as to the accuracy of independent predictions, especially when a market is heating up.
“There have been a lot of delays in projects. If you asked a few years ago [about the future market] people were saying that all graphs are showing things will be going up, and that hasn’t materialised. Then you find a 2012 deadline becomes 2015. But we anticipate higher turnover. Probably a few months ago everyone was predicting doom and gloom and we posted a higher turnover.”
And the collaborations don’t seem to stop. At time of writing, the company had just announced a joint venture with John Holland, an Australian rail contractor part of Leighton Holdings, to capture opportunities among the region’s upcoming rail projects. Called Advance Rail Group, it is yet another chance for the firm to prove its credentials.