“The results show that we’ve improved significantly again on the previous year and achieved new record figures.”

Anton Affentranger, CEO

“In the past we’ve always said we need to make a significant improvement in the Switzerland Segment. And the results for 2016 show that we’ve managed to achieve this.”

Beat Fellmann, CFO

 

 

“There’s still a lot of potential within our Group”

In its tenth anniversary year, Implenia increased its profitability and set the course to become a major player in the European construction market. The Group’s various markets are still healthy, it still has potential for further growth, and in the Swiss market it has achieved a successful turnaround in its key Buildings business. CEO Anton Affentranger and CFO Beat Fellmann sat down to talk about the tasks that lie ahead, and to look back on a year full of highlights.

“The results show that we’ve improved significantly again on the previous year and achieved new record figures.”

Anton Affentranger, CEO

 

Implenia celebrated its tenth birthday last year. So the Group must have got a lot of things right?

Anton Affentranger: We have done a lot right, but by no means everything. Looking back over the last ten years since the company was first established, I certainly think we’ve come a very long way. We set ourselves three targets back then: to achieve synergies in the Swiss business and also in our sectoral businesses, and to reach a critical mass that would allow us to grow outside Switzerland too. I believe we have achieved these targets. The success of the first decade is reflected in the trajectory of Implenia’s valuation: we have consistently managed to generate value.

How will Implenia keep itself fit enough to celebrate further successes in future?

Anton Affentranger: We are fighting every day for new contracts and we’re working very hard to ensure ongoing projects are executed smoothly. That’s how we keep our customers satisfied and simultaneously achieve a good financial performance. As long as we remain agile and smart in our response to the rapidly changing demands of the market, Implenia will still be generating value in ten years’ time.

Beat Fellmann: We’re in a state of permanent transformation and we’re heading for a future of great upheaval in our industry. There’s the whole issue of digitalisation to cope with, for example, and the “war for talent”, and the fact that we’ve just seen the first year in which more people entered retirement than entered the labour market. These are major challenges for us as a company but also for society as a whole.

So is one of the secrets to Implenia’s success that it never stands still?

Anton Affentranger: Implenia keeps adapting. We cannot allow ourselves the luxury of standing still. That’s how it is and how it should remain. Neither the market nor our customers will let us rest. But the future looks good for us, because we have the power to keep evolving continuously. I’m absolutely sure about that.

Beat Fellmann: At the same time we always work from the solid foundations created by our values, such as reliability, sustainability, transparency, and financial and operational excellence. This is the basis from which we’ll continue to exploit the opportunities that change always brings.

The opening of the Gotthard Base Tunnel was undoubtedly one of the highlights of 2016. Implenia was instrumental in building the tunnel. What significance does the project have for Implenia?

Anton Affentranger: We built two-thirds of this “once-a-century” project. I’m very proud that as a Swiss company we were involved and that we proved we had the capabilities – in terms of risk management, logistics, technology and personnel – to master such a huge and complex project. The Gotthard has played an important role in building our reputation and is an outstanding calling card for us.

Beat Fellmann: We laid an important foundation for our success with this project, right in the middle of Switzerland. It absolutely vindicates the part of our vision that says “we build and develop the Switzerland of tomorrow”. And now, after ten years, this doesn’t just apply to Switzerland but also to Europe.

There were various changes on the Board of Directors at the start of the year. How well are management and the newly constituted Board working together?

Anton Affentranger: We’ve built up a very good working relationship. The Board of Directors and management are pulling in the same direction. This is another key to Implenia’s success. At the same time, the Board is also more present within the company, which sends out an important signal to our employees and others.

Turning to the course of business in 2016, are you satisfied with last year’s performance?

Anton Affentranger: The results show that we’ve improved significantly again on the previous year and achieved new record figures. Our Development Segment has delivered another excellent performance and the Switzerland Segment reported excellent results, in large part because of the successful turnaround of our Buildings business. We’ve also improved the quality of our order books.

Beat Fellmann: We also need to mention the impressive performance put in by our Infrastructure Segment. This was partly down to the good results reported by our Foundation Engineering business in Switzerland and Germany, and partly to the good performance of our Tunnelling units in Switzerland and, increasingly, in other countries.

Anton Affentranger: In contrast to our Infrastructure activities outside Switzerland, our International Segment was dragged back by a disappointing performance in Norway. We’ve already taken the appropriate corrective measures, and with market conditions also looking good, we’re confident that we can get back on our feet here. Business in Germany and Austria was in line with our expectations.

Beat Fellmann: Across the Group as a whole, revenues were stable and our profitability improved markedly. Some years ago we defined our course and set a medium-term EBIT target of CHF 140 to 150 million. These results take us a clear step towards this goal. We’re not there yet, but our improved international positioning and successful business in Switzerland give us a platform from which we can hit the target.

You have talked about the difficult year in Norway. Implenia made organisational changes there in autumn 2016. Why?

Anton Affentranger: We had to acknowledge that the Scandinavian unit did not have the best organisational structure. Following intensive discussions with different teams from both countries, we decided to split the organisation between two country units, each with its own management.

Beat Fellmann: The organisations in the two countries are at different stages of development. Norway has been part of the Group for longer, it’s much bigger, and it has suffered as a result of the growth experienced in recent years. Sweden, by contrast, is a new entity.

Anton Affentranger: With Stig Ingar Evje as the new boss in Norway and Fredrik Björckebaum in charge in Sweden, we have two young managers who will make a success of the work that lies ahead. We’re confident that the action we’ve taken will bear fruit in 2017 and 2018.

Bilfinger Hochbau strengthens Implenia’s presence in Germany. What do you hope to gain from the acquisition?

Beat Fellmann: The Bilfinger Hochbau acquisition will push our revenue in Germany to almost CHF 1 billion. That puts us in a very different market position compared with two years ago. The acquisition gives us a critical mass in Germany that opens up further growth potential. It has also given us a long-established and attractive portfolio of customers.

Anton Affentranger: The economy in Germany is in very good shape. The country has benefited from the European system and the euro. It’s Europe’s largest economy and it has a large pent-up demand for infrastructure construction as well as a very dynamic market for building construction. Gaining access to this market can only be a very good thing for us.

The job now is to make the most of this potential. And will Implenia be able to do this?

Anton Affentranger: We’ve got no doubt about that at all. We’ve laid the foundations in our home markets in terms of organisation and personnel, so we now need to build on this and develop the business.

How important a role will trends like digitalisation play here?

Anton Affentranger:Digitalisation is an enormously important trend for the whole Group across all its markets. We made various investments in this area last year, building up our expertise by recruiting specialists, buying software licenses and launching pilot projects in Switzerland and abroad. When it comes to digitalisation in Switzerland, we take our role as the country’s leading construction and construction services company seriously, and we’re working very closely with our customers and partners. In some places outside Switzerland, there’s simply no other way of working. In Norway, there’s an expectation that companies will be comfortable with digitalisation. And on the Albvorland tunnel project in Germany, we’re using BIM models in close cooperation with Deutsche Bahn.

Finally, let’s look at Implenia’s financial targets. In recent years, the company has always talked about an EBIT target for 2017 of CHF 140 to 150 million. Are you sticking to that target?

Beat Fellmann: We’ve always said we need to make a significant improvement in the Switzerland Segment. And the results for 2016 show that we’ve managed to achieve this, which means that we can still be optimistic about reaching our target.

Anton Affentranger: We’ve made a big leap forward. We’re going to build on this and take another step to hit the 2017 EBIT target of CHF 140 to 150 million. The way Implenia is set up now gives us even more potential for the future.

Interview by Reto Aregger

“In the past we’ve always said we need to make a significant improvement in the Switzerland Segment. And the results for 2016 show that we’ve managed to achieve this.”

Beat Fellmann, CFO