Executive Board Report
Downloads Condensed Annual Reports
Building a robust company
Building a robust company, in order to prepare it for the challenges in the years ahead, was the main focus of the Executive Board in 2012. After years of unprecedented growth, Hertel needed to consolidate, refocus and reprioritise its ambitions. This is exactly what was achieved in 2012. We were able to establish the foundation for a stronger and more competitive Hertel company.
We are convinced that we have strongly improved the future prospects of Hertel. In 2012, we agreed on a financial restructuring with our shareholders and trusted banks. And, in that same year, we revised our strategic programme, focussing it more on performance improvement instead of top line growth as Hertel did in the 2005 – 2010 period.
In total, our shareholders provided € 136 million of new equity. We were able to adjust and reduce the Revolving Credit Facility with our banks. The total package reflected the commitment and the confidence of our two major shareholders and the banks that Hertel is on its way back to the position of a solid business performer. Our company has gone through a difficult period and a lot of work has yet to be done. However, we are confident that we laid a solid basis in 2012 for a healthy and prosperous future for Hertel.
Our 2012 results reflect the measures we had to take. Hertel suffered a net loss of € 32.9 million, although revenue was up by 1.6%. This was driven by, among others, a well performing Offshore business, which presented a very solid growth. Business also thrived in The Netherlands, the UK, Ireland, the Middle East and Asia. Other regions performed less, suffering from a difficult market environment, internal inefficiencies and restructuring measures.
Organisational Improvement
We updated our strategy and developed an organisational improvement program called HEART which is the cornerstone of Hertel’s revised marketing and organisation approach. HEART stands for the Hertel Group that will concentrate on achieving Excellent sales and Accelerating efficiency, that is Result-oriented through working together in a Talented organisation. Behind each of these key terms lies an array of tailored, well-defined measures that are aimed at improving our performance in the specified business areas. We want to become a top three player in our relevant markets. Hertel has defined fourteen projects that are aimed at improving operational performance. For example: fixing underperforming businesses; reducing working capital; more efficient procurement procedures; streamlining our business control framework; improving operating practices; and hiring and developing the best people, offering them an organisation in which they can develop themselves and help boost the company.
Going forward, we will focus on organic growth. This comes after a period in which acquisitions were the driver behind Hertel’s strong growth ambitions. Now we will concentrate on consolidating our activities and realising group synergies. We will strengthen our position in mature markets, and expand our presence in emerging and volatile markets only when the risks are manageable.
To achieve excellence in sales, we will focus on recurring business and develop Access Solutions, Insulation and Corrosion Protection and linked Mechanical Services – both on- and offshore. We will strive to maintain or reach leading positions in our local markets, working for blue chip companies and end users.
Accelerating efficiency means that Hertel will combine local entrepreneurship with constantly improving operating procedures. It means we will improve risk management and business forecasting, and that we will be selective in the projects we accept. We will go for controlled, profitable growth, being selective on partnerships and becoming more cost effective by leveraging the potential of the Group.
Talented people are the key to improving our performance so we will invest in training and knowledge sharing, in an engaged and motivated workforce. We will have a flexible and capable workforce whilst, at the same time, reducing labour costs. People who make the difference are at the heart of our business.
Our success will be built on three pillars:
We have communicated our new strategy in all our businesses all over the world and experienced strong support for this approach. This makes us even more confident that Hertel’s organisation is ready to face the challenges ahead, and that we will deliver on our promises.
Executive Board
From left to right: Kees de Korver, Eiko Ris, Paul Broekhuijsen, Frank Robben
Economic and Market Environment
We continue to see great variety in the development of the markets in which Hertel operates. In Europe, the ongoing weak economic development has had an impact on the sectors in which we work. A slowdown in industry investments also affects us, even though the installed industrial asset base continues to offer good opportunities for our maintenance services. Decreasing industry margins put pressure on pricing. In other regions, such as the Middle East, Asia and Australia, conditions were more favourable.
Construction is booming in Saudi Arabia and Asia, whilst in Australia the LNG market shows a high growth pace. All this made 2012 a year in which we saw differences in regional performances. Overall revenue and gross profit were up, however, as a result of market conditions and the cost of the measures we took to prepare our company for the future, we booked a net loss. During the year, the steps we took to improve business performance started to take effect.
Building a robust company, in order to prepare it for the challenges in the years ahead, was the main focus of the Executive Board in 2012. After years of unprecedented growth, Hertel needed to consolidate, refocus and reprioritise its ambitions. This is exactly what was achieved in 2012. We were able to establish the foundation for a stronger and more competitive Hertel company.
We are convinced that we have strongly improved the future prospects of Hertel. In 2012, we agreed on a financial restructuring with our shareholders and trusted banks. And, in that same year, we revised our strategic programme, focussing it more on performance improvement instead of top line growth as Hertel did in the 2005 – 2010 period.
In total, our shareholders provided € 136 million of new equity. We were able to adjust and reduce the Revolving Credit Facility with our banks. The total package reflected the commitment and the confidence of our two major shareholders and the banks that Hertel is on its way back to the position of a solid business performer. Our company has gone through a difficult period and a lot of work has yet to be done. However, we are confident that we laid a solid basis in 2012 for a healthy and prosperous future for Hertel.
Our 2012 results reflect the measures we had to take. Hertel suffered a net loss of € 32.9 million, although revenue was up by 1.6%. This was driven by, among others, a well performing Offshore business, which presented a very solid growth. Business also thrived in The Netherlands, the UK, Ireland, the Middle East and Asia. Other regions performed less, suffering from a difficult market environment, internal inefficiencies and restructuring measures.
Organisational Improvement
We updated our strategy and developed an organisational improvement program called HEART which is the cornerstone of Hertel’s revised marketing and organisation approach. HEART stands for the Hertel Group that will concentrate on achieving Excellent sales and Accelerating efficiency, that is Result-oriented through working together in a Talented organisation. Behind each of these key terms lies an array of tailored, well-defined measures that are aimed at improving our performance in the specified business areas. We want to become a top three player in our relevant markets. Hertel has defined fourteen projects that are aimed at improving operational performance. For example: fixing underperforming businesses; reducing working capital; more efficient procurement procedures; streamlining our business control framework; improving operating practices; and hiring and developing the best people, offering them an organisation in which they can develop themselves and help boost the company.
Going forward, we will focus on organic growth. This comes after a period in which acquisitions were the driver behind Hertel’s strong growth ambitions. Now we will concentrate on consolidating our activities and realising group synergies. We will strengthen our position in mature markets, and expand our presence in emerging and volatile markets only when the risks are manageable.
To achieve excellence in sales, we will focus on recurring business and develop Access Solutions, Insulation and Corrosion Protection and linked Mechanical Services – both on- and offshore. We will strive to maintain or reach leading positions in our local markets, working for blue chip companies and end users.
Accelerating efficiency means that Hertel will combine local entrepreneurship with constantly improving operating procedures. It means we will improve risk management and business forecasting, and that we will be selective in the projects we accept. We will go for controlled, profitable growth, being selective on partnerships and becoming more cost effective by leveraging the potential of the Group.
Talented people are the key to improving our performance so we will invest in training and knowledge sharing, in an engaged and motivated workforce. We will have a flexible and capable workforce whilst, at the same time, reducing labour costs. People who make the difference are at the heart of our business.
Our success will be built on three pillars:
- Relentless focus on day to day business;
- Continuous improvement through our HEART programme; and
- Our strategic framework that is based on key competences and selected markets.
We have communicated our new strategy in all our businesses all over the world and experienced strong support for this approach. This makes us even more confident that Hertel’s organisation is ready to face the challenges ahead, and that we will deliver on our promises.
Executive Board
From left to right: Kees de Korver, Eiko Ris, Paul Broekhuijsen, Frank Robben
Economic and Market Environment
We continue to see great variety in the development of the markets in which Hertel operates. In Europe, the ongoing weak economic development has had an impact on the sectors in which we work. A slowdown in industry investments also affects us, even though the installed industrial asset base continues to offer good opportunities for our maintenance services. Decreasing industry margins put pressure on pricing. In other regions, such as the Middle East, Asia and Australia, conditions were more favourable.
Construction is booming in Saudi Arabia and Asia, whilst in Australia the LNG market shows a high growth pace. All this made 2012 a year in which we saw differences in regional performances. Overall revenue and gross profit were up, however, as a result of market conditions and the cost of the measures we took to prepare our company for the future, we booked a net loss. During the year, the steps we took to improve business performance started to take effect.
