Heijmans is active in energy, construction and infrastructure projects, including consultancy, design, development, realisation, and management and maintenance. We are also active in property development and integrated area development. We use digitalisation to create data-driven services and industrial automation and software development are increasingly becoming an integral part of our products and services. Our choice to be active in the energy, construction and infrastructure, property development and area development segments, and to an increasing degree in digitalisation and ‘as a service’ concepts has an impact on Heijmans’ risk profile. We have made a conscious choice in our strategy to expand the share of recurring business in our revenue. This lowers our risk profile as a company through our commitment to recurring clients and work.
For construction companies of Heijmans’ size, which often act as main contractors, various risk mitigating aspects apply in the event of an economic crisis or economic recovery. Our various activities (Heijmans business areas) do not usually enter into (economic) crises at the same time. In the case of public sector clients, their business cycle tends to lag somewhat behind the private market and the peaks and troughs are also less extreme than in the private market. This is particularly true in the field of large infrastructure and non-residential works. In addition, there is still pressure on the housing market due to the lack of affordable housing. While the government regularly takes measures to stimulate the housing market, here the measures are more indirect (aimed at buyers) and the market is largely determined by consumer confidence, which tends to recover less quickly. We are now seeing housing associations invest more in the realisation of new projects and accelerating measures aimed at making their existing stock more sustainable, thanks to the removal of the landlord levy. It should be noted that order intake, revenue and returns behave differently in the shift from boom to bust and vice versa.
Partly linked to this are two additional risk-mitigating factors. Because Heijmans operates in several sectors, it has a considerable degree of diversification. In the past, this acted as a natural hedge on several occasions, as not all (sub)sectors normally shrink or grow at the same time. A typical example of this is that the maintenance market continues even when the new-build market shuts down. In addition, while the construction sector is cyclical, for a main contractor like Heijmans, cyclicality varies by sector. This has to do with the size and duration of the order book at the time of a crisis. Thanks to our management model, we are able to respond to developments in good time, as this model enables us to exchange personnel between sectors to a large degree and adjust our cost structure. In addition, we try to move with the market by maintaining a flexible shell of staff.
To remain at the top of the Dutch construction sector, Heijmans is investing heavily in sustainability, industrialisation, digitalisation and innovation. Together with the complexity and integrated nature of our projects, the reciprocal composition of these elements in individual projects largely determines the risks we are willing or unwilling to take on. Our portfolio of projects, contracts and services largely determines Heijmans’ risk profile.
From the selection of a contract or development through to aftercare, our risk management process is aimed at maintaining the right balance between entrepreneurship, returns and the risk profile Heijmans is targeting. The markets in which we operate are diverse, challenging and often competitive. We carry out projects and service contracts ranging from simple and small in size to large and complex. Therefore, we are constantly making choices about which projects suit us and which do not, with a responsible balance between risk acceptance and earning potential as a general premise.