Vincent Clancy, chief executive of the project management consultancy Turner & Townsend, has said that he remains confident of prospects for growth in the business despite an anticipated 20 to 30 per cent decline in volumes within its natural resources business.
Mr Clancy, while speaking to The National as the company celebrated its 10th anniversary in the Middle East at an event in Dubai last week, said that he expected the shortfall in natural resources to be made up by gains in its property and infrastructure divisions.
“Overall, globally we’re up about 10 per cent in revenue on last year,” he said. “We’ve managed to absorb the decline that has been in the natural resources market, deploy resources elsewhere and still achieve growth. That’s one of the benefits of our model.”
The company, which employs more than 4,100 staff, achieved sales of almost £380 million (Dh1.98 billion) in the year to April 30, 2015 – up 8 per cent year-on-year. Net profit increased by 9 per cent to £27.3m.
The company’s three business units had previously each contributed about one-third of Turner & Townsend’s overall revenues. However, its natural resources arm provided just 21 per cent last year, while its infrastructure business contributed 30 per cent. Property has been its star performer, providing the remaining 49 per cent through serving global estate programmes for the likes of Chevron and Barclays.
In the same period, its Middle East division grew sales by 45 per cent and now employs more than 250 staff. It has developed a niche in airports, working for Dubai Airports on Concourse D and Abu Dhabi Airports overseeing the US$3bn Midfield Terminal Complex. It has also worked on airport projects in Muscat, Salalah and Doha. In property, it is delivering the $1.5bn Burjeel Hospital at Mohammed Bin Zayed City for VFS Healthcare and has advised Emaar on hotel projects.
“Those first 10 years have gone by very quickly but have been very successful for us,“ said Mr Clancy. Although it had to make cutbacks as construction activity dried up after the 2008 financial crisis, he said it had been “relatively fortunate in the sense that we weren’t that big at that stage”.
“[We took] a long-term view. We kept capability here, made sure we continued to do the right things and we recovered very quickly.”
He said that Dubai is one of 25 world hubs where it is targeting market leadership in project management, but acknowledges regional markets face “a number of headwinds”, not least the collapse in oil prices and tensions between states.
“We are expecting markets to toughen over the next cycle but we think we are in a good place to deal with that. We are diversified in terms of clients.”
The company’s international push in recent years means that it now earns 41 per cent of its revenue from its home market in the UK, but this has included advising on the huge Crossrail project in London and Manchester City football club on its new academy stadium.
BMI Research recently highlighted the UK as a hot spot for the construction sector in 2016, stating that it has “the strongest infrastructure project pipeline in western Europe”, as well as a robust housebuilding sector.
However, a survey by the Royal Institution of Chartered Surveyors (RICS) this month also indicated that labour costs are soaring, fuelled by a shortage of skilled workers. Average construction earnings increased by 6 per cent in the year to October, compared with overall UK wage inflation of 2 per cent.
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