When Stewart Macphail was appointed to the CEO’s role at Saudi contracting group Mohammad Al Mojil Group (MMG) in June last year, the challenge facing him was pretty daunting.
The previous CEO had come and gone within a matter of months, the company was racking up eye-watering losses and there was a genuine possibility that the company could fail.
The business, which is an oil & gas contracting specialist, had got itself into a significant financial hole.
“It took too many risks on too many large projects. Fundamentally, the amount of money that was spent on those projects was greater than the revenue for 13 out of the last 14 projects that it bid,” he told Construction Week at the company’s headquarters in Dammam.
“If you do that enough times, you lose money. And that's what they did.”
During the 2012 financial year alone the company declared losses of $355m on revenues of $373m as it sought to extricate itself from long-term, turnkey projects that were proving disastrously unprofitable.
“Some of those losses are in the single percentage points, and we've got a couple that are over 100%. So we've spent double what we earned. You can't do that too many times.”
By its 2012 year-end, MMG’s total accumulated losses had mounted to more than $550m (SR2.09bn) and its liabilities outweighed its assets by $261.2m (SR979.7m).
An emergency general meeting had been triggered in November, where shareholders were asked to vote on whether the business should be allowed to embark on a restructuring or be broken up and sold off.
It was Macphail’s job to convince them it was worth saving, and to present the plan through which this would happen.
So why did he decide to take on responsibility for a company which many may have considered to be beyond salvation?
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