Imtech UK’s new general manager plans to streamline and consolidate the business over the coming months but will not be making any acquisitions this year.
Paul Kavanagh, who took over as general manager from Jim Steele on 1 January, told H&V News that acquisitions across the group have been suspended as a direct result of problem projects in Poland, which caused Dutch-owned parent firm Imtech NV to write down £86 million and breach its bank covenants.
But he said the UK firm would be unaffected by the acquisition freeze, as it had no plans to buy this year.
Following the write-down announcement, the group’s share price was down 55 per cent this week, from 19.65 euros to 9 euros, and the group has already said it will not be paying a 2012 dividend.
Mr Kavanagh, who co-founded the UK M&E, technical FM, engineering contracting and systems and processes firm, said 2013 is “about consolidating, getting the organisation right and setting a basis for going forward” in the UK.
However, he said that this strategy was not linked to problems with the Polish business and that consolidation will focus on raising the profile of Imtech as a brand while retaining its local presence.
Mr Kavanagh said he could not comment on what options Imtech NV may pursue, pointing out that NV are responsible for the corporate position of the group.
Asked whether the group’s breach of bank covenants has had any impact on Imtech UK’s bidding strength, he said his team were “very comfortable at the moment that we retain [clients’] confidence, both in stuff we are bidding and delivering”.
He said the firm is generally bidding on smaller projects “where that sort of conversation doesn’t arise”, adding that “it has not affected any business we are looking at at the moment”.
The same factors apply to working with JV partners such as Laing O’Rourke, with whom Imtech UK is bidding the Thames Water AMP6 work, he added.
UK consolidation will focus on creating a more streamlined business while raising the profile of Imtech, which has expanded rapidly through acquisition and organic growth since it was founded in 2003.
Mr Kavanagh said that UK revenue, including the Irish division and UK international operation in the Middle East and Kazakhstan, is now “considerably larger” than the £500m reported for the 2011 financial year, but denied reports the company is working towards a £1bn revenue target.
He stressed that Imtech’s primary driver remains profitability and cash generation, saying the firm has generally acquired strong businesses, either at the sort of profitability they want or with the aim of getting them there, along with getting regional coverage.
Mr Kavanagh said the group will continue its policy of letting people who grew and sold the various businesses carry on running them within a flat management structure.
But he added: “What we do want to do is streamline the business so people are more aware of the capability in contracting and technical maintenance. At the moment they tend to identify with the regional business and not Imtech.”
Mr Kavanagh has been central to Imtech UK’s growth to employ 3,300 people, and said there has been no radical shift in the plan, adding “we always knew we were going to get to this point”. He said he had worked very closely with Mr Steele for 25 years.
Imtech boss Paul Kavanagh expects M&E to continue to take the strain as the largest subcontract, given that it has the most investors and is undertaken t a late stage in the construction process.