Consultant Hyder started the year with an acquisirion to grow its capability in energy - just one sector for which chief executive Ivor Catto has high hopes for growth in 2013. Antony Oliver reports.
“I feel that there is going to be a great deal more expenditure coming in the highway sector and there is still huge potential in rail and across the Environment Agency porfolio”
Last December marked Ivor Catto’s fourth anniversary as chief executive of consultant Hyder. And, despite working through one of the toughest economic periods in living memory, the firm has continued to buck the trend and deliver growth across its portfolio of civils and building consultancy.
In November the firm reported revenues for the half year ending 30 September up 8% on the same time last year, with pretax profits up 36% to £11M and head count growing by 8% to nearly 4,000 staff around the world.
And, as Catto points out, this success continues to be spearheaded by Hyder’s international activities as it services a growing number of key clients predominantly across Asia Pacific, Australia and the Middle East and will drive its strategic aim to be the “consultant of choice for targeted key clients”.
“Australia has always been a good market for us and we are looking forward to getting some new big wins there,” he says, pointing to the fact that the economy across this region remains largely insulated from the recession seen across Europe and the US.
As global demand for minerals accelerates, mining activity continues to dominate Australia’s infrastructure market bringing with it opportunities for consultants like Hyder across its entire portfolio, delivering 38% of the firm’s revenues.
“In the UK you have to look at the market place over a number of years, and over a long period it has been and remains an excellent market to be in. As a firm we have always made money and generated cash in the UK market”
This work spills over into Asia, which accounts for 7% of revenues, and where major activity in Hong Kong also continues to deliver good growth and good projects for Hyder, says Catto.
“Transport and property are the primary sectors for us in Hong Kong, although we have also won projects with our masterplanning and landscape engineering skills in the region,” he says. “There is a lot of work going on and Hong Kong has recently announced another 10 new major infrastructure projects.”
And as Catto explains, success in Hong Kong has also enabled the firm to springboard into the potentially lucrative Chinese consultancy market.
“In China we are looking for our investment to come back to us very soon,” he says, highlighting the fact that the firm has now had a successful presence in Shanghai for several years.
As demonstrated by last year’s announcement that it was carrying out concept design for what would be the world’s tallest building, the 838m tall Sky City in the south-central Chinese city of Changsha - a tower that the developer believes can be built in an extraordinary 90 days.
Meanwhile, the Middle East continues to deliver for Hyder across the region accounting for 24% of revenues. It is now just over a year since the firm won the massive £80M consultancy deal with Qatar public works authority Ashghal to transform Doha’s roads and drainage network ahead of the 2022 football World Cup.
As Catto said at the time: “We have done a lot of work to position ourselves in good geographies, in good markets and with good clients. Qatar is going to be making a concerted effort to improve its infrastructure, with £100bn set to be spent in the build-up to the World Cup. This is the first contract to come out of it.”
This was followed up with other contracts to design the world’s biggest reservoir and work on the Doha Metro.
Today Catto remains hugely confident of the prospects both in Qatar and in the whole region, which he says has remained a strong growth area for the firm, particularly as the United Arab Emirates (UAE) is now “getting more life in it”, particularly in Abu Dhabi and to a lesser extent Dubai.
The success has come from a strategy of seeking out clients for whom Hyder can, as Catto puts it, “make a difference for and really add value”, and working on the biggest “most innovative projects in the world”.
“We have done a lot of work to position ourselves in good geographies and with good clients”
Meanwhile, Catto is also still very confident about the UK market’s ability to deliver decent returns in 2013 despite the continued economic pressure on public and private finances. Pressure that prompted the firm to issue a warning in November last year that its UK results - 24% of its business - were likely to be below expectations in the year to 30 March 2013.
“UK market conditions continue to be challenging, particularly in the highways sector, and results for the year are likely to be below our initial expectations,” Hyder reported in November ahead of its interim results.
Yet today Catto remains confident that 2013 will start to show signs of recovery in the UK market.
“Across the UK there are some big infrastructure projects underway and in planning,” he says, highlighting the fact that, for example, Hyder is one of six firms on the professional service framework for phase 2 of High Speed 2 and so is involved in the huge amount of studies that have to take place ahead of construction.
“I feel that there is going to be a great deal more expenditure coming in the highways sector and there is still huge potential in rail and across the Environment Agency’s portfolio,” he adds. “We are positioning ourselves in the growth areas.”
And, of course, following last week’s £3M cash purchase of specialist consultant Power Systems Project & Consultancy Services, this very much includes the energy sector.
As Catto points out, Hyder is well placed in the UK’s nuclear programme - both in new build and decommissioning, with a contract to support earthworks contractor Bam/Kier at Hinkley Point C and as one of three remaining bidders for the £300M- £400M design and construction of water cooling tunnels at the site.
It is also providing environmental consultancy services to Horizon Nuclear Power for its proposed new nuclear power station at Wylfa in Wales, is bidding for similar work with Nu-generation for its site at Sellafield and is fully engaged in the ongoing multi-billion decommission programme supporting Magnox North and South and the Nuclear Decommissioning Agency.
“In the UK you have to look at the market place over a number of years, and over a long period it has been and remains an excellent market to be in. As a firm we have always made money and generated cash in the UK market.”