The year 2016 was by far Heijmans’ worst financial year in recent decades and in the company’s history. A series of major loss-making projects put the company’s survival in doubt.
The following year, 2017, was dominated by solving the problem projects, but also preventing new ones. Among other things, with the establishment of the Risk Office, we steered our risk appetite in relation to our earning potential. In subsequent years, the focus was on managing on the basis of margin over volume and projects that were a good match for the company. This led to a step back in volume in 2017, largely due to the sale of our foreign operations. From that point on, we increased revenue in a controlled manner. We also took steps to restore profitability and improve positive cash flow and the predictability of our financial results.
The main contribution to the recovery has been an emphatic focus on the company’s risk appetite with matching earning potential. Risk appetite refers to the level of risk that Heijmans is willing to accept or is exposed to in its pursuit of long-term value creation. Risk appetite involves risk limits. These are determined by the company’s culture, corporate governance and management systems, and are laid down in Heijmans’ values, code of conduct, policies and procedures and authorisation schedules. More risky projects are not automatically excluded in advance, but are strictly assessed on the basis of track record and higher earning potential. In addition, Heijmans steers both between and within all business areas for a good balance in the revenue mix. As part of achieving the right risk-return ratio for Heijmans, the company’s portfolio has shifted in several areas in recent years. This means fewer (very) large projects and more medium-sized projects, no traditional new DBFMO contracts, more construction team and two-phase contracts, and a growing share of maintenance projects and services (recurring business) compared to new construction projects. All of these shifts have made the organisation more robust and predictable, as we have embedded various measures in the organisation. As a result, we are able to complete complex projects successfully and according to plan. We do this under the motto: ‘Stick to the plan’. We are very pleased that this has been accompanied by an increase in the total order book and improved earning potential.