Energy and utilities interims
Happy New Year and welcome to Interim Partners’ Energy and Utilities blog.
At the risk of sounding like an armchair economist I am going to make a prediction. I think 2009 will be a good year for interim management within the Energy and Utilities sector. Here’s why. It’s easy to ignore inefficient business practice when your revenues are guaranteed or when the commodity price that underpins your business is high and rising. Add increasing geo-political risk, regulatory pressure, EU CO2 targets, energy supply issues and the bursting of the commodity bubble and you are left questioning your business model. Business transformation is going to be as important as ever as is investment in infrastructure. As more investors seek safe havens in defensive stocks, there will be increased pressure to generate value.
I see opportunities within business change and transformation, IT and systems (SAP), engineering and operations and most notably in finance and procurement. Utility businesses would benefit from retail and financial services interims whilst sector specific engineering and operations expertise has long been in short supply. This is especially so in upstream oil and gas and infrastructure.
Turning to my first thoughts for 2009: Could the new build nuclear programme, massive investment in upgrading existing network infrastructure and capacity and the commitment to renewables prove to be the foundation for an economic upturn? Read Obamanomics http://www.moneymorning.com/2008/11/06/outlook-2009
January 22nd, 2009 at 3:44 pm
The stock market would appear to share Duncan’s view as Utilities stocks generally have held up reasonably well in the present bear market. As well as the opportunities in business change and the other areas mentioned it will be interesting to see if the level of investment in people is maintained as training budgets tend to be early victims of financial pressure. It would be an ideal time for companies to signal their intent by upskilling their people to meet the demands of restructuring and remodelling.
January 26th, 2009 at 12:55 pm
Duncan. I tend to agree with you that utilities will not suffer as much as other sectors. However in terms of interim opportunities I think most of the larger utility players have already taken the benefits of ERP implementations and are keen to sweat the asset. Also most of the key players are entrenched in their UK holdings, so I don’t anticipate any M & A work. Therefore new work is more likely to emerge in the growth areas such as renewables and nuclear as you say.
January 26th, 2009 at 3:00 pm
Some new projects will inevitably be postponed; however those who have already had funds committed to them will be seeking help to slim costs and tighten schedules. We should see projects being defined at the expense of extended planning time to allow fixed price contracts rather than cost reimbursable
Upstream organisational reviews will be brought forward. Typically for the older fields new emphasis will be given to reducing manning costs, we have had some success in flattening operational organisations with very worthwhile lifting cost savings, and that should prove again to be of interest to clients.
March 11th, 2009 at 2:21 pm
March 2009 already - the year is well underway. Clients within the energy and utilities sector are faced with the same challenges as any other sector. Transforming their businesses whilst reducing costs. There are a number of programmes that have been mothballed or resourced internally, however it remains clear, clients would benefit from the expertise of seasoned interim managers. The second quarter of 2009 will see many clients address these issues and come to the interim market.