Contractor appoints consultancy Roland Berger in attempt to boost performance
Galfar Engineering and Contracting, one of the largest construction firms in Oman, has announced the implementation of an 18-month efficiency programme, as it looks to revamp its operations and achieve sustainable profit.
Overseeing the whole scheme will be the international consultancy Roland Berger. The Germany-based firm has been appointed by Galfar to help it make sustainable improvements in its financial performance and operational efficiency, the Omani contractor said in a filing to the Muscat Securities Market.
“In the short term, special emphasis is on unlocking liquidity which includes addressing receivables,” it added. “The board and the major shareholders are committed to take necessary measures to strengthen the balance sheet and net worth of the company in accordance with regulatory requirements and Commercial Companies Law.”
Galfar is regarded as one of Oman’s largest construction companies, with more than 20,000 employees and a confirmed order book of $1.66 billion at the end of 2015.
“Galfar’s revenues for 2016 are expected to be at par or above 2015 levels despite an increasingly challenging market environment,” it said in the statement released to the bourse, adding that the company board was also in the process of appointing a financial advisor.
“In the short-term, a special emphasis is on unlocking liquidity which includes addressing receivables. A new organisational structure has already been defined and an international recruitment firm is being hired to strengthen the management team and improve overall effectiveness.”
It added that the board of directors was ‘fully committed’ to the implementation of the “transformation programme”, which is expected to take between 12 to 18 months, with the first tangible results already expected in the second quarter of this year.
As part of its mandate, Roland Berger has developed a “holistic transformation roadmap”, Galfar said.
“Key building blocks of this programme include organisational transformation and enhanced talent management, enhanced liquidity management and assets optimisation, overhead cost reductions, productivity improvement and lean on-site execution, supply chain management optimisation, and information technology transformation.”
According to financial figures released recently, Galfar Engineering saw a loss of $69.1 million in 2015, against a net profit of $511,688 in the previous year. This was mainly due to a provision for receivables to the extent of $78.3 million (mainly for the Muscat Expressway and Central Corridor project), a Times of Oman report said. Total revenue for the group stood at $896.7 million in 2015, against $967.5 million in 2014.