AMEC - Vision 2015

You need Adobe Flash player to view this content.
You can download it the flash player here

You're watching our latest programming from AMEC

Coming up

Registration
Simply fill out the form below and get instant access to our content.

Transcript excerpt:

Vision 2015

You're outlining a new vision for the company today. So what's envisaged?

Samir Brikho. Yes, it is a refined vision with more explicit clarity on where we want to see our sectors playing a major role, whether it is in the area of natural resources, nuclear, clean technologies, water and environment. Our goal with this vision is clearly that we would like to enhance growth and we need to increase the focus on growth whilst improving the margin. From a financial target, encapsulated in one sentence, what we would like to do, is to increase our earnings per share to be greater than 100p by 2015, which is more than doubling from our current position.

And how will all that be achieved?

As we did in 2006, we had a very clear plan at that time over what action we needed to take in order to achieve on the 2008 and the 2010 targets. And this is not going to be different. The 2015 vision is based on three sets of actions. One is how are we able to enrich our people and skills and talents? That goes to the area of how are we able to attract, to maintain and to develop further our people. It's also about how are we able to equip them with state-of-the-art technologies in terms of harmonised tools and processes. And it's also very important that we are able to get more efficiency and higher productivity than what we are doing today. So this is one set of actions.

The second set of action is how are you able to have a more efficient capital structure? Which means that we need to get much more focused on acquisitions. And that's coming.

And the third set of action is how are you able to enrich and enhance your capabilities which you have? Here I'm thinking about the sectors which we are playing in. Of course AMEC has a lot of skills with natural resources. We are very much involved in deep water activities and in complex jobs. But also we are looking at possibilities in new areas like sub-sea activities and how we're able to enhance further our pipeline engineering. Also, on the power side, we're seeing the world changing. And we see a big move now towards renewable energy, towards biofuels, towards nuclear. And those are the main areas in which we would also like to be very well positioned. And water is becoming a major issue in this world, because people are underestimating the amount of water we need in order to be able to serve the increased population.

So these are capabilities within the businesses. But then you need to see how are we able to increase our capabilities within the geographies? If I go back to 2006, we were at that time present in some 30 countries. And today, after all the acquisitions which we have been doing, we are at present more than 40 countries. And this is becoming more and more important, because we need to move out with your customer. Now as we're seeing, our customers are becoming more global. That means we need to move with them. So we see growth areas. We definitely have identified some time ago Asia as being very important. Latin America is very important. And also we see quite a lot of growth coming out of the Middle East. So we will be having a major focus on these areas, while we are also continuing to serve our clients in good markets in Europe and also in North America. So there's quite a lot of focus on geographies.

But what we are seeing more and more, becoming vital and almost imperative, is that, if we don't have an integrated approach, if we are not able to serve our customers through the three businesses which we have, I think we'll be a loser, and that's why we're making now a lot of changes on that one. So an integrated approach is going to be one of the things which are going to be very highly focused on to drive the growth.

2015 goal

Ian, how will this new EPS target be achieved?

Ian McHoul: We think of it in terms of the four levers that we have at our disposal. The first is obviously revenue growth. We believe we will achieve a greater growth rate than we've done in recent times, which is averaged at 8%, so we imagine we will beat that rate. The second is on margin enhancement. Over recent times we've been focusing very much on margin growth. And we've done well to get it up to a number of nearly 8% this year. We think the rate of growth going forward will be lower, so we won't accelerate margins at the same pace. But we still absolutely believe that margins will continue to grow. The third is on cash investment. We see acquisitions very much as part of the story going forward. We see plenty of opportunity and we imagine that we will be significant beneficiaries of those opportunities. We will of course look at additional shareholder distributions, but not at the expense of removing our flexibility for acquisitions. And then lastly, it's tax efficiency, where we intend going forward to be much more proactive in the management of our tax affairs.

Will you need to make major investments to achieve your plans?

Yes, we do intend to up-weight our activity around acquisitions, because we think the opportunities are there. Our track record on acquisitions has been very good, and we think we've gained experience of how to buy well, how to integrate well, and we intend to upscale that activity. We have a strong balance sheet, and we intend to put that to good use in driving value going forward. Also of course we will increase our fire power by using operational cash flow and we expect significant improvements in our cash generation going forward.

And what assumptions have you been making when you look over the longer term about economic growth rates and the oil price?

Okay. What we're imagining is a gradual improvement to more neutral economic conditions, if you like. So we're not imagining a sharp boom or a movement to a more buoyant economy. On the oil price, again, we're not seeing, we're not projecting a sharp jump. But we are seeing a more stable environment, pretty much in line with current market consensus.

On 2010, however, we do believe the market will continue to be challenging. But we think we are well placed in that marketplace. And just to reiterate, we are firmly on track to achieve our 8.5% margin target that we've got out there.

And you mentioned shareholder distributions. When and how do you envisage making shareholder distributions?

We think about shareholder distributions in two pots. The first obviously is ongoing normal half-yearly dividends. And I think here we have a strong platform for growth going forward. We intend therefore to maintain a progressive dividend policy and we are satisfied with our current cover, which is about 3x. The other pot is additional distributions, if you like. Now I've already said that our priority is around acquisitions, and we don't want to restrict our flexibility for that. However, we will of course consider shareholder distributions if the environment is ripe for that. However, there are no plans for additional distributions in the near term and you should not expect any in next year, in 2010.

Management and organisational change

Can you run through the senior management changes that you're making?

Samir Brikho. The next stage of our Vision 2015 is about truly creating One AMEC. And while we were engaged in our Operation Excellence programme, we were harmonising all the tools and the processes and we saw how many commonalities we were able to create when it comes to culture, and even the way we talk and the way we act. And looking at this, we saw that we could actually create even more efficiency and we could better improve on our collaboration if we're able actually to join forces together. And therefore I've decided that I'm going to bring together the Power and Process division together with the Natural Resources division, because if we have that under one common management we'll be able to serve our clients better. And I think this is very important, as it allows actually a greater depth in terms of alignment and in terms of breadth in how we are able to serve our clients. And of course all those are actions that'll help us to achieve our Vision 2015.

And how much over the 100p are you going to set your own internal targets?

We always have, of course, higher internal targets than what we communicate as the external targets because we want to be sure, as a minimum, to achieve the external targets. But we believe that we have been setting ourselves quite challenging targets from 2006 to 2010, which we have done very well with, and we'll take it from there.

full transcript»

Cantos produces financial news videos daily. Watch interviews with leading FTSE 100 and 250 companies on the morning of announcement. It's free to view. Cantos - for the latest UK business news and stock market analysis.

To watch this video and gain access to our full archive you must be a registered user.
Not registered?
Registration is free and only takes a minute.
Click here
Already a user? Log in

By viewing the video or accessing the transcript you are agreeing to accept the Cantos terms and conditions.

Also on Cantos


  • 0:00 1st Jan,

  • 0:00 1st Jan,

  • 0:00 1st Jan,

  • 0:00 1st Jan,

  • 0:00 1st Jan,

Bookmark & share:

Email this url to a friend


http://www.cantos.com/

Sign up for our weekly newsletter

Sign up for our weekly newsletter detailing the latest programmes on Cantos. Simply send us your email address below and we'll do the rest.

We will not use your email address for any other purpose or pass it on to third parties. You can unsubscribe from the newsletter at any time.

Sign up for in-depth email alerts

Get the latest in-depth company news straight to you inbox. Simply send us your email address and we'll do the rest.

We will not use your email address for any other purpose or pass it on to third parties. You can unsubscribe from the newsletter at any time.

Not registered?

Please log in to view the full video. If you do not have an account, please consider registering. Registration is free and only takes a minute.

Register here