Odebrecht hopes to expand portfolio to $5b this year, return to growth
Odebrecht Engenharia e Construção (OEC) plans to expand its project portfolio to $5 billion by the end of 2021. In recent years, the construction company has seen its inventory of construction projects plummet year after year, reaching a level of $3.4 billion at the end of 2019 - or about 10% of the size it was in 2014.Now, the goal is to grow again, says the company's new CEO, Marco Siqueira. "We want to expand, with quality, starting in 2021. Whether we are going to take slower steps or run, this will depend on the market's capacity," the executive told Valor.
The current economic crisis has postponed some opportunities, but the company managed in the last 90 days to sign four new contracts, three of them in Brazil and one in Peru. Domestic projects total R$400 million (equivalent to $75 million at the current exchange rate), but that may reach R$1 billion if the company secures other phases of one of the projects in this package, the executive said.
The potential market for projects that OEC is looking at in hopes of securing new contracts by the end of 2021 - both in Brazil and abroad - is estimated at $5.8 billion, the company said.
The construction company's targets include energy generation and transmission projects, decommissioning of oil platforms, highway construction, basic sanitation projects, and industrial projects. One of the challenges will be to win projects with a higher degree of complexity, where Odebrecht is able to stand out and to obtain higher margins.
"We don't think that there will be a lack of projects, neither in terms of number or size. But in engineering, in general, there is that rule that 80% of the revenue comes from 20% of the contracts, and this was the case in the past. So it's up to us to be assertive [when choosing projects]," said Mr. Siqueira, who stepped into the position at OEC two months ago. He came from another company in the group, real estate developer OR.
Another difference in OEC's performance going forward will be the focus on private customers - including both manufacturers and private infrastructure concessionaires.
"We want to be our investors' partners in EPC [engineering, procurement and construction]. When concessionaires win an auction, they generally already have some idea of who will be their technical partner. We want to position ourselves as service providers," he says. OEC already has structured partnerships for thermal generation plants and highway projects, he says, but...
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