LONDON, (Reuters) – British support services and building firm Interserve Chief Executive Adrian Ringrose cautioned that its growth in the Middle East will not rebound to 2009 levels in the short term, playing down investor expectations.
“We peaked there in 2009, fueled from Dubai Airport and the significant projects in Abu Dhabi and obviously those are gone, and for the moment don’t look like they’re ever going to be repeated,” Ringrose told the Reuters Global Real Estate and Infrastructure Summit in London.
“It will be a while before we get back to anything approaching the profit contributions we’ve had out of equipment services,” he said.
But he noted that the United Arab Emirate market is starting to come back to life, while Saudi Arabia will be one of its top three or four markets this year in equipment services after only entering the market in 2009.
Analysts are forecasting high growth for Interserve in the Middle East, whose largest market is in Qatar where it employs up to 12,000 people.
“The market (in Qatar) is still churning out a level of work, it just hasn’t taken off yet,” he added.
Interserve has secured a strong pipeline of contracts over the next 12 months — including increasingly scarce public contracts, with government-backed work accounting for nearly a third of the firm’s profits.
Operating margins in Britain are expected to fall back from a high of 3 percent last year to around 2 percent, Ringrose said.
“Our long term average has been around 2 percent, and we would expect to be back around that level,” said Ringrose.
Interserve has a war chest of approximately 100 million pounds ($161.9 million) for acquisitions, but has the option to turn to new debt and equity investors if the right opportunity arises for something of “a considerable scale.”
Interserve has debt facilities of 250 million pounds, Ringrose added.
Takeover talks with UK peer Mouchel (MCHL.L) broke down earlier this year as the two companies failed to reach an agreement over valuation.