WSP and Parsons Brinckerhoff joined forces several months ago. Since then, I have had the opportunity to meet and speak with a number of employees in our combined business across the EMEIA region. They have often mentioned what an attractive combination our two world-class businesses make for our clients and our employees; in addition, our respective businesses in the region are regarded as highly complementary.
The first two months of 2015 saw positive activity across the region as we have sought to define leadership in each country,bringing in the best of both organisations. Extensive integration programmes are now underway to combine both operations as quickly as possible, so we can leverage revenue synergy opportunities and align skill sets across sectors. There is no doubt that as a combined business, we have great potential for growth in our markets and services, as well as for our people. This brief outline provides a retrospective of the past year and the economic conditions under which we have operated, and highlights the areas in which we see future growth potential.
I am pleased to report that our overall regional performance was positive in 2014, with increased backlog and market share in most countries – despite a number of regional challenges brought on by government budget deficits and a resulting lack of public spending.
The United Kingdom was very buoyant throughout the year with a strong pipeline; it will be interesting to see how the upcoming general election impacts capital projects and energy policy decisions post-May 2015.
The strongest growth areas are still property, rail, highways and local government transport – we have had significant project wins across all four sectors, including the Highways Agency framework. Our environmental team was also awarded consultancy work on the Crossrail 2 business case, which has significantly enhanced our reputation. The power and energy sector remains subdued following a disappointing outcome at The National Grid’s capacity auctions in December. Transmission, however, is anticipated to pick up in about 12 months as we near the end of the regulatory period. We are well placed to take advantage of this thanks to our reputation in this market.
In Sweden, WSP is the third-largest firm in terms of workforce. We enjoyed a dominant position in the infrastructure sector; in total, some 65% of our turnover was in the public sector. Sweden remained stable, with various major projects awarded, including Trafikplats Värtan – one of the largest bridge design assignments in WSP’s history – in addition to the subway extension design in Stockholm, which covers Odenplan-Hagastaden-Arenastaden. As a result of increased mining activity in Sweden, WSP was also involved in northern urban development in the town of Gällivare, with approximately 250,000 m2 of city planning. In the industrial sector, we were involved in Scania’s expansion of production capacity for long vehicles in Oskarshamn.
Across Finland and Denmark, WSP and Parsons Brinckerhoff’s combined operations will benefit from increased scale amid a challenging economic outlook.
In Central Europe, the economy fared reasonably well given government budgetary pressures in many countries due to high deficits. Both France and Poland showed signs of recovery in early 2015.
Our position is improving, supported by a new leadership structure, which was implemented at the end of 2014. France has maintained its position, especially in aeronautics and defence, with many key clients such as Airbus continuing to provide a pipeline of work. Prestigious projects such as the new Louis Vuitton building – an architectural jewel in Paris – also give us a strong reputational advantage.
While business has remained difficult in Germany, we maintained key relationships with financial services provider Allianz in Cologne and Hamburg. Project wins include the extension of the Dingolfing production site for BMW.
In Poland, our team was recently awarded the contract to reconstruct and extend the Promenada shopping mall in Warsaw.
In the Middle East, we maintained strong positions in all sectors, despite some potential impact due to oil price volatility. Margins improved, as a trend towards increased backlog continued. We continued to hold strong positions in key sectors such as property and buildings, with project awards including roles in the Dubai Mall Boulevard Expansion (Dubai), Le Méridien Hotel (Qatar) and Abu Dhabi Airport (Abu Dhabi), as well as expressways in Qatar and two rail-related schemes in Dubai. The outlook remains positive and the combination of WSP and Parsons Brinckerhoff should provide further impetus in transportation. Our power and industrial markets also saw an increase in activity in early 2015.
In South Africa, we are similarly optimistic, thanks to an early strengthening of our position in property and a strong services backlog. This is despite a stagnant gross domestic product (GDP) forecast and high inflation. In Africa, we have a well-respected delivery record in our core operating areas (transport and infrastructure, industrial, property and environment and energy). Key projects include the current Transnet National Ports Authority framework agreement and work being undertaken by our industrial division for brewer SAB Miller. Finally, we continue to be one of the major players in Africa’s power sector, having secured a number ofgeneration and transmission projects, including the Ressano Garcia project involving a new, natural gas-fuelled power plant in Mozambique.
As we continue to integrate WSP and Parsons Brinckerhoff, we know our biggest advantage lies in the significant revenue synergy opportunities our combined operations can generate. Our complementary expertise and positive reputations are expected to create these synergies, which should translate into increased market share across the region.
In particular, we will be looking at ways to capitalise on our already successful programme management model in the rail and infrastructure sectors. The goal is to determine where this model can be extended to ensure deeper involvement across the region. Some major synergies include:
For over five years, our clients have benefitted from the wide range of expertise housed in our off-shore complementary resource centre in Noida, close to Delhi in India. The 400-strong team provides a range of high-quality, cost-effective design solutions, from concept to detailed design, adding additional, flexible resource to meet global client demands.
This will remain important for us moving forward. We will also focus on attracting and retaining top-calibre talent in order to achieve our ambitions.
From a regional perspective, opportunities are clearly numerous:
Going forward, our objectives are clear. By working together as a combined team, we will continue to strive to create value for our clients, partners and employees.