Shaker Group targeting retrofit projects in its turnaround plan: CEO

Saudi-based Al-Hassan Ghazi Ibrahim Shaker (Shaker Group) has begun implementing its strategic plan to streamline operations, creating efficiencies and cost reductions in an effort to turnaround the business, its CEO Azzam Saud Almudaiheem told Argaam in an exclusive interview.

"We expect to continue to operate in a soft construction and real estate market, which poses a challenge for our business. We have been operating under these conditions for some months now, and the ‘Breakthrough Program’ is a response to soft market conditions," he added.

Launched in February, the “Breakthrough Program” is based on four pillars - core business turnaround, talent upgrade plan, performance infrastructure and strategic moves – aimed at improving business performance. The program will be implemented in 2019 and 2020.

Read: Shaker Group announces transformation plan

Confident of the “positive” impact of the program on the operational and financial aspects, Almudaiheem said the group has already seen success in the rollout of some of the plan’s initiatives, particularly when it comes to reducing operating expenses and improving efficiencies.

"While we have experienced difficult years in a challenging market, we’re now addressing these issues head-on for improved performance. Our program is supported by the long-term promise we see in the market for AC and home appliances, and we intend to exploit every relevant opportunity available in the Kingdom. "

Last week, Shaker Group reported a net loss was SAR 196.5 million the 12 months ended December 31, 2018, as well as a headcount reduction of 27 percent for financial year 2018.   

Read: Shaker widens FY18 loss by 15% on sales revenue slump

When asked if the company was planning to further reduce its headcount this year, the CEO said one of the core pillars of the transformation program was the “talent upgrade plan” which seeks to attract and develop top quality human resource as well as improving the organizational structure and rationalizing headcount.

"We have taken a close look at all job functions and have reduced numbers in some segments of the business, but have also upgraded our talent pool by hiring in critical positions to support our long-term plans, as well as enhancing our sales force. At this stage of the program, we will be more focused on enhancement than on rationalization."

Given the Saudi government’s “Tarshid” retrofitting program and economic growth in line with the Vision 2030, the Shaker Group is set to bid for several of the retrofitting projects in the Kingdom’s public and private sectors.

“These projects represent an important opportunity for us to exploit our dominant market share of the Multi V product range, and we view retrofitting as an exciting growth avenue for the group.”

The “Tarshid” program will retrofit assets including 2 million street lights, 110,000 government buildings, 35,000 schools, 100,000 mosques and 2,500 hospitals and clinics.

Meanwhile, Shaker Group is also focusing on exploiting commercial opportunities in the Kingdom, including district cooling, strategic projects, energy saving services and capacity building.

In January, the company, the exclusive manufacturer and distributor of LG air conditioners in Saudi Arabia, expanded its production capacity to manufacture high-performance multi-fan air handling units in the Kingdom.

“Our diversification plans are well underway and, in establishing ESCO as a business unit of the group, we took an important step in widening our operations and revenue streams,” said Almudaiheem.

Write to Parag Deulgaonkar at parag.d@argaamplus.com