Should more CEOs get their hands dirty at the coal face?
A Channel 4 show has brought office-bound executives into close contact with the people doing the heavy lifting to demonstrate the effect the decisions they take at the top have on their employees.
The series, Undercover Boss, moved into the realms of publicly-listed companies last night with an episode involving Colin Drummond, CEO of recycling and waste management firm Viridor, part of FTSE 250 water group Pennon. Stripped of his suit and with a beard, Drummond masqueraded as unemployed John Roy, seeking a job in the waste sector and was put to work at household recycling sites and on waste picking lines at Viridor’s sites across the country.
In one scene, Drummond was shown flustering when welcoming cars and directing drivers as to where their different rubbish should be placed at Viridor’s Arkwright Street site, prompting an employee to comment, “Obviously he’s a little bit slow.” In another he was visibily shocked at the working and breaktime conditions at an older site in Bristol. ” This is a tough old job,” Drummond was shown as saying.
At the end, Drummond reported his findings to the board and, as CEO, asked those employees who had impressed him to share their good ideas with other sites and investigate new technology that could make their jobs easier. Drummond said afterwards the experience had been a real eye-opener. “It’s exposed me to some of the things that we do really well, things we need to work on, and given me a full, rounded view of how the company works on a day to day basis.”
So, should all top executives ensure they have this sort of work experience on their CVs? Would it help them do their jobs better? After all, Tesco’s current boss Terry Leahy started on the shop floor, while the supermarket’s CEO-designate Philip Clarke stacked shelves in the store run by his father.
Sea Energy eyes 24-hour wind turbine maintenance
LONDON (Reuters) – Britain’s SeaEnergy said the service vessels it was developing would allow companies to access offshore wind turbines during the nighttime and in tough wintry conditions.
The construction and maintenance of offshore wind turbines is fraught with difficulties owing to their position many miles from the coast and often in deep water, making access limited.
SeaEnergy on Wednesday announced an exclusive deal to use the Ampelmann access platform aboard its vessels. Unlike other platforms, the gangway requires no docking station and remains stable even in rough seas, making it easier for engineers to walk onto turbine installations from boats.
“By placing the accommodation vehicle offshore and the Ampelmann system on our vessel we’re able to operate virtually 24 hours a day, 365 days a year,” Robert Trahan, Chief Executive of SeaEnergy’s new Marine Services division, told Reuters.
Trahan, who worked as a diver for North Sea oil platforms, said this would increase revenue for wind farm constructors as it would allow them to accelerate production by working through the year, instead of only for an average of eight months at present.
SeaEnergy Executive Chairman Steve Remp also said there had been increased interest from potential buyers of part of its wind farm developing unit, which it hoped to sell.
“I’m really pleased at the level of interest and there’s international interest,” Remp said. “You can expect more news in the next month or two.”
GDF Suez takes control of International Power
LONDON (Reuters) – Europe’s second-biggest utility, GDF Suez (GSZ.PA: Quote, Profile, Research, Stock Buzz), is set to take control of smaller UK rival International Power (IPR.L: Quote, Profile, Research, Stock Buzz), creating the world’s largest independent power producer in terms of revenue.
International Power shareholders will receive a special dividend of 92 pence once the deal is completed, totaling 1.4 billion pounds ($2.2 billion) and at the top end of analyst expectations, in exchange for relinquishing control of the company.
The deal brings an end to months of speculation after original talks were aborted at the start of this year.
GDF, which will merge its GDF Suez Energy International unit into International Power, also plans to make a “contribution” in exchange for new shares, although what form this would take and what the overall value of the deal would be remains unclear.
Analysts put the value of International Power at between 380 pence and 420 pence per share, against its current share price of around 370 pence.
The GDF unit will be transferred into the British firm with net debt of 4.4 billion euros, the companies said on Tuesday, less than analysts had expected.
Although GDF will hold a 70 percent stake in the new company, International Power’s top management, including Chief Executive Philip Cox and Financial Director Mark Williamson, would retain their positions within the new company.
GDF Suez takes control of Intl Power
LONDON, Aug 10 (Reuters) – GDF Suez (GSZ.PA: Quote, Profile, Research, Stock Buzz) is offering International Power (IPR.L: Quote, Profile, Research, Stock Buzz) shareholders a cash sweetener of $2.2 billion in a reverse takeover of the British firm that will create the world’s largest independent power producer in terms of revenue.
The move will also give GDF, Europe’s second-biggest utility, a greater presence in the United States, Middle East and Asia, as well as give it access to the UK and Australia.
GDF will put its GDF Suez Energy International unit into International Power and will then hold a 70 percent stake in the new company, the companies said in a joint statement on Tuesday.
International Power shareholders will receive a special dividend of 92 pence per share, totalling 1.4 billion pounds, in exchange for relinquishing control of the company.
The combined company, which will retain its London listing, will have generating capacity of over 66 gigawatts (GW) and revenues of 84 billion euros ($111.5 billion).
International Power Chief Executive Philip Cox and Financial Director Mark Williamson will retain those positions at the new company.
The two companies had entered abortive talks at the start of this year, but revived them last month. [ID:nLDE66I07L]
Morgan Sindall says construction recession not over
LONDON, Aug 9 (Reuters) – British construction group Morgan Sindall (MGNS.L: Quote, Profile, Research, Stock Buzz) said growing demand for office buildings was helping to offset the impact of government spending cuts on its business, although the construction recession was not over yet.
“The commercial side is growing, but let’s not over exaggerate — it’s growing a bit but not as quickly as governments are spending less,” Executive Chairman John Morgan told Reuters on Monday after the construction group reported a 3 percent fall in first-half profit.
Morgan, who co-founded Morgan Lovell in 1977 before it combined with William Sindall in 1994, said public sector work now accounts for about 50 percent of the group’s work, down from 60 percent.
Morgan Sindall, which fits out offices and builds schools and houses, said its order book had grown to 3.7 billion pounds ($5.9 billion) from 3.2 billion at the start of the year, although the outlook remained tough.
“It’s been challenging for a couple of years now and the recession in construction is not over yet,” Morgan said.
Its shares were down 2 percent at 556 pence at 0734 GMT, valuing it at about 241 million pounds.
“If you look back at statements from Morgan Sindall or anyone else in the sector, you’ll see a challenging outlook, but to be honest the numbers are in line with expectations,” said Panmure Gordon analyst Andy Brown.
Connaught sees loss for year, shares plunge
LONDON, Aug 6 (Reuters) – Stricken social housing specialist Connaught (CNT.L: Quote, Profile, Research, Stock Buzz) said it will likely make a loss this year and will write down the value of its assets, after British government cutbacks hurt its business.
The news hit its battered shares hard on Friday, sending them down a further 47 percent to 15.7 pence.
They had already tumbled almost 90 percent since local governments deferred spending on 31 social housing contracts, forcing Connaught to issue a profit warning at the end of June.
Suppliers and sub-contractors then started to put additional pressure on the company’s cash flow and it announced in July it was in dire need of funds. [ID:nLDE66P0DQ]
A media report earlier this week said Connaught’s lenders had started selling off their loan exposure. [ID:nLDE67223O] The company, which gained a bit of breathing space after its lenders agreed a 15 million pound overdraft last week, also said on Friday it will make a provision for future losses on current contracts in its results for the year to end-August and was reviewing its accounting policy. [ID:nLDE66S0B5]
Connaught said it would continue to focus on refinancing the company.
“The company will record a material loss at an EBITA level (including current year exceptionals) and will be no better than breakeven at an adjusted EBITA level for the current financial year,” it said.
Cookson sees better H2, recovery still partial
LONDON, Aug 4 (Reuters) – Industrial materials group Cookson (CKSN.L: Quote, Profile, Research, Stock Buzz) said it still had some way to go to return to pre-crisis levels after first-half profit bounced back thanks to improvements in its steel and electronics markets.
“The recovery in our markets is still only partial, so despite the good progress in sales and profits, we’re still well below 2008 levels,” Chief Executive Nick Salmon told Reuters on Wednesday.
The company, whose products are used in the glass and solar industries as well as by steelmakers and foundries, reported first-half trading profit of 120.3 million pounds ($186 million), compared with 16.5 million last year on sales up 33 percent at 1.2 billion.
“The recovery in steel production and electronics markets, which started in the middle of last year, has been slightly stronger than we anticipated,” Salmon said.
Cookson also said the second half would be better than the first, and that it was seeing clear signs of recovery in the foundry castings market in Europe and North America.
It said, however that continuing global economic uncertainty meant that it would not reinstate the interim dividend.
Its shares, which have gained 23 percent over the last month, dropped 4.7 percent to 455.7 pence by 0728 GMT.
Weir, Rotork upbeat for 2010 as orders improve
LONDON, Aug 3 (Reuters) – British manufacturers Weir (WEIR.L: Quote, Profile, Research) and Rotork (ROR.L: Quote, Profile, Research) said they were positive about demand in the second half of the year as customers were placing orders again and delayed projects were restarting.
Pump maker Weir on Tuesday posted a 58 percent rise in first half pretax profit as mining and oil and gas clients ordered more equipment, while Rotork, which makes valve control systems, reported a better-than expected 9 percent rise in profit.
“The input trends that we’re seeing, particularly in minerals, because of that lead time…will start to flow through as revenues and profits in 2011,” said Weir Chief Executive Keith Cochrane in a conference call with reporters.
Rotork CEO Peter France told Reuters the improvement in orders had continued into the third quarter after rising 19 percent in the second quarter.
“We’re seeing some of the (delayed) orders breaking, projects that were going slower have speeded up and the indications are that it’s very positive going into the second half,” he said
Shares in the two midcap companies dipped after the results, with Weir down 0.7 percent and Rotork, which also serves the oil & gas and energy industries, losing 1.7 percent.
Both have had strong runs of late, with Rotork gaining 27 percent this year and Weir up 63 percent.
Drax delays biomass plant on unclear govt support
LONDON, Aug 3 (Reuters) – Drax (DRX.L: Quote, Profile, Research, Stock Buzz), the operator of Britain’s largest coal-fired power station, will push back into 2011 the investment decision on its first dedicated biomass plant, as it awaits clarity on government support.
Drax plans to build three new dedicated biomass plants with Siemens (SIEGn.DE: Quote, Profile, Research, Stock Buzz), each with output of 290 Megawatts, and had expected to prove the investment case for the first plant this year.
“If you commit to an investment this year you will not know what the band (for government support) will be when you go into operation in 2014,” Chief Executive Dorothy Thompson told reporters after Drax reported a 23 percent rise in first-half profit.
The group commissioned a co-firing biomass facility in June but this is only running at two-thirds of capacity due to high prices and Drax has said that new government support does not go far enough. [ID:nLDE65T1GD] [ID:nLDE66Q1HA]
Thompson said however that Drax, whose eponymous coal-fired plant in Yorkshire is one of the biggest emitters of carbon dioxide in Europe, was very much committed to biomass as Britain seeks to move towards a low-carbon economy.
“We have the largest co-fired facility in the world and we have bought millions of tonnes of biomass,” she said. “We know how to burn it, buy it and transport it.”
DEMAND STABILISING
Intertek ups sales forecast on improved trading
LONDON, Aug 2 (Reuters) – Britain’s Intertek (ITRK.L: Quote, Profile, Research, Stock Buzz) upgraded full-year revenue forecasts as product recalls and the BP (BP.L: Quote, Profile, Research, Stock Buzz) oil spill result in stricter environmental regulations and greater demand for its testing services.
“Product recall, quality issues always drive our business in certain industries,” Chief Executive Wolfhart Hauser said, highlighting the toy recall by Mattel (MAT.O: Quote, Profile, Research, Stock Buzz), the Gulf of Mexico oil spill and also recalls by carmaker Toyota (7203.T: Quote, Profile, Research, Stock Buzz). [ID:nLDE671028] [ID:nTOE66S07Q]
Intertek shares were up 6 percent at 1,673 pence in early trading, among the top risers on the blue-chip index .FTSE.
Shares in rivals also gained on Monday, with SGS (SGSN.VX: Quote, Profile, Research, Stock Buzz) up 1 percent and Bureau Veritas (BVI.PA: Quote, Profile, Research, Stock Buzz) up 1.4 percent.
Intertek, with over 1,000 labs worldwide, is not directly involved in testing oil platforms but is active in the upstream market, offering services such as checking pipelines for corrosiveness and testing crude oil.
“New regulations which surely will come up will help us to drive that business,” Hauser told Reuters on Monday.
The firm, which also tests a range of products from toys and footwear to computers, upped its 2010 organic revenue growth forecast to mid-single-digit rates thanks to improving trading and reported a 3.3 percent rise in first-half profits.
-
Follow Victoria
