Interview with Gauthier Louette, Chairman and CEO of SPIE
2010 WAS THE FIFTH YEAR OF SPIE’S LBO ALLIANCE WITH PAI PARTNERS. WHAT’S YOUR VIEW OF THE PROGRESS MADE DURING THAT PERIOD?
Our Group is stronger today than it was when the LBO was launched five years ago. During the period, the business has expanded by an average 9% a year and EBIT practically doubled. We’ve closed the gap with our top-performing com-petitors. Our improved margins, com-bined with enormous progress in cash management, enabled us to generate €1.2 billion in cash and cash equivalents over the period, which we used for two purposes –paying down debt and, above all, acquiring more than 50 companies.We should also emphasise the effectiveness of our business model over the past few years in a more difficult environment. We’ve remained focused on robust growth, mainly – but not exclusively – in energy markets. Today, SPIE is also making gains in high-potential fields like healthcare, public housing, sustainable mobility, energy efficiency and high-speed networks. Thanks to our extensive local presence, we’re also well posi-tioned to meet more complex demand requiring synergies among our multi-technical businesses.
HOW HAS THE LBO CHANGED YOUR COMPANY?
Carrying out such a project requires the active involvement of all team members – not just the shareholder – around an ambitious, shared vision of the future.We’ve demonstrated that we can respond quickly to change, exercise discipline in our choice of business ventures and suppliers, and constantly adapt our organisation to changes in the marketplace.We’ve also supported the development of a community of entrepreneurs with an organisation that is closer to customers and a more equitable sharing of the value created. In France, for example, major discretionary and non-discretionary profit-sharing agreements were signed with personnel representatives that enabled us to pay out over €20 million to employees in 2010 from our 2009 earnings. A unanimous agreement was also reached with trade unions to improve employee healthcare coverage. All of these measures have helped to create a dynamic of shared progress, in line with SPIE’s traditional values.
AGAINST THIS BACKDROP, HOW WOULD YOU ANALYSE SPIE’S 2010 RESULTS?
Our Group demonstrated solid resilience thanks to our balanced business portfolio and strong order intake. Backlog was up 6% at 31 December 2010 compared with one-year earlier. We acquired around ten companies in France and the Netherlands that together represent €79 million in additional revenue. We also continued to pay down debt,reducing our debt-to-EBITDA ratio in one year from 3.2 to 2.4, a level generally seen in companies that have not been involved in an LBO. From a geographic perspec-tive, our results improved despite a European situation that still varied from one country to another. In France, we returned to growth with revenue increasing 2% on an organic basis. Our performance was satisfactory in the Northern countries, which are more dependent on international trade. In the United Kingdom, for example, we continued to successfully diversify our operations, expanding from services into the industry and energy sectors. In Belgium, despite a contraction in sales volumes, EBIT stood at 4% of revenue. In more challenging environments like Portugal, we maintained our positions thanks to a strong local presence. In our specialised businesses, we benefited from favour-able market trends, especially in oil and gas. So we can say that in 2010, SPIE enjoyed an upswing in business and a solid improvement in margins.
IS IT POSSIBLE TO MEASURE THE GREEN ECONOMY’S IMPACT ON THESE RESULTS?
We currently estimate the green econo-my’s impact on our business at 20%, a figure that is expected to increase to 30% by 2015. Our goal is to lead the way in a number of innovative areas, especially energy efficiency. In France, during the year, we signed the first energy performance service contract, which takes into account the high standards endorsed at the country’s Grenelle environment conference. In many regions, we’re actively supporting green initiatives, working alongside elected officials in long-term partnerships to reduce energy consumption and thus carbon emissions. All of these initiatives will be stepped up in the future, regardless of the political and economic ups and downs. That’s because the green economy is not an abstract idea. It’s a scattered yet constant phenomenon that is spreading across all sectors. It’s also a new way of looking at our businesses, in which consulting services and guaranteed results play an increasingly important role. The year saw strong growth in our data centres business, which is focused on energy efficiency. The goal is to ensure superior technical, financial and environmental performance, backed by a range of skills that together will create energy savings and sustainable operations. To accom-plish that goal, we can leverage a number of assets, including the exper-tise of our Technology Institute, which recently welcomed its 400th intern.
IS THE GREEN ECONOMY COSTLY TO YOUR CUSTOMERS, ESPECIALLY DURING A CRISIS?
Energy is what is costly to our customers, not the green economy. And that will continue to be the case, given the increasing scarcity of resources and growing demand from emerging markets. The same is true in the fight to reduce global warming. We’ve assessed the carbon footprint of our operations, which clearly shows the direct and indirect costs for the company. Based on this analysis, we’ve introduced a sustainable procurement strategy that will help us improve our performance and serve cus-tomers more effectively. The goal is the same for our customers. The green economy represents a way for them to stay competitive and ensure their long-term development in an environment that is often still challenging. When we renovate a town’s public lighting system, for example, we provide the community with higher-performance installations that are also more environmentally friendly and can generate cost savings of over 40%.
SPIE CLAIMS IT HAS BEEN COMMITTED TO SUSTAINABLE DEVELOPMENT FOR YEARS.HOW ARE YOU APPROACHING THIS CHALLENGE?
We have a special obligation in this respect, given our local presence and the fact that our businesses affect people’s everyday lives. In addition, sustainable development is an integral part of our commitment to be an upstanding member of society, which extends from hiring the disabled to our contributions as a corporate citizen to developing public policies. Sustainable development also involves our own operations, our social and environment priorities, and the ways in which we overcome problems or remedy fail-ures through teamwork. I’m thinking in particular of safety, which is an absolute necessity in our company. However, we must regretfully report four deaths during the year, a tragedy that is especially hard to accept given that our Group is seen as an industry benchmark in the area of safety. We’ve adopted new, stricter safety standards but we need to go every further if we want to become an accident-free enterprise over the long term. We’re going to completely review our safety culture and its practices, and in particular do everything we can to see that those most familiar with the risks – namely our worksite technicians – are fully involved in introducing new preven-tive measures.
2011 IS SHAPING UP AS A NEW CHAPTER IN SPIE’S HISTORY. WHAT REASONS DO YOU HAVE TO BE CONFIDENT?
We are one of the leading independent groups in Europe, our fundamentals are strong and we enjoy remarkable potential. We have an aligned, sustainable business model, a shared vision of the economy and a common objective, which is to assert our leadership in Europe. After weathering a severe economic storm in recent years, we’re now going to step up our deployment to achieve this goal, especially in Northern Europe. The goal is to broaden our presence in the United Kingdom, Belgium and the Nether lands while also positioning ourselves in Scandinavia in sectors that remain relatively fragmented and create growth opportunities for our businesses. That in itself is a strong indication of our confidence in the future and our renewed ambition for the years ahead.