Besix Watpac CEO Mark Baker said the company will deliver a profit this year and more to come
There was never a tougher time to take the helm of a large construction company but after almost two years as CEO of Besix Watpac Mark Baker says there is plenty to look forward to.
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There was probably never a tougher time to take the helm of a construction company in Australia.
When Mark Baker became Besix Watpac chief executive in November 2021 the sector was reeling. A who’s who of major Australian construction companies collapsed or were struggling in an environment of material cost increases, supply chain issues and labour shortages.
For the Brisbane-based 44-year-old, who took the big job after serving as chief financial officer for the previous 10 years, it was a baptism of fire and Mr Baker now has his eyes firmly on the future.
“We’re emerging from a relatively tough period of time post Covid and there were a number of negative factors that impacted on the construction industry,” he said.
“But I think we’re now almost back to a new normal with a little bit of fresh air ahead of us.”
According to Besix Watpac’s annual review for 2022 the company finished the calendar year with a revenue of $980.4m and a loss before tax $17.75m compared to a small profit in 2021 of $3.53m.
Looking to the future, it finished 2022 with a workbook approaching $2bn, almost $284m in cash reserves and currently has about 650 staff across Australia and New Zealand.
“Last year was really tough. We were working through a number of projects that were run just prior to the significant price escalation that hit the market,” Mr Baker said.
“In 2024 we will be rid of some of the projects that were under pressure from the pre-Covid tendering days. This year we will do about $1.3bn in turnover and we’re looking at a small profit. We will be able to do much better profit wise in the 2024 calendar year.”
Besix Watpac is celebrating its 40th anniversary and its roots can be traced back to the early 1900s when the Watkins family established a small construction firm in North Queensland.
Gregory Watkins founded Watkins Pacific in 1983. Ten years ago international contractor Besix Group acquired a 15 per cent interest in the then ASX-listed Watpac from property tycoon Kevin Seymour.
In 2018, Watpac joined Belgium-based Besix Group as a wholly-owned subsidiary and in 2022 contributed about 20 per cent to the group’s global turnover.
Mr Baker, a Gregory Terrace old boy who studied Commerce/Arts at UQ, arrived at Watpac at 2010 via Ariadne Australia.
He beefed up resume completing an advanced managed program with the Harvard Business School Executive Education before becoming CEO.
In short tenure he has overseen a number of phases of the company, most recently having been a driving force behind the integration of the Watpac and Besix Group business and repositioning the company as an engineer-led multidisciplinary contractor.
However, Mr Baker has not ruled out a return to development in some form in the future despite the company offloading all of its project sites for about $300m between 2013 and early 2018.
“I wouldn’t say that was off the cards. But we’re not going to be one of those organisations that goes and buys blocks of land and tries to get development approvals. What we’re looking at doing is possibly partnering with a developer and bringing our construction expertise along the journey,” he said.
“We’re looking at diversifying what we do alongside the core construction business. Overseas the group has a big concessions and asset business and also a property development business.
“If we can replicate what we’re doing successfully and have diversification around contracting at the core I think that will allow us to ride out some of the variability in construction volumes and profitability.”
Despite rumours that Besix Watpac was up for sale, Mr Baker said it could not be further from the truth.
“We’re further integrating our business into the Besix Group through systems and processes. Actually, we’re going in the complete opposite direction than what you would if you were going to sell the company,” he said.
Mr Baker said they were very selective on what projects they took on.
Some of the more recent landmark projects include Jubilee Place in Brisbane which is its Australasian head office and Sydney’s Poly Centre. It expects to complete The GPO Hotel Marriott project in Adelaide and Kangaroo Point Green Bridge to the Brisbane CBD in 2024, and the Te Kaha Stadium project in Christchurch, New Zealand, in 2026.
Mr Baker said Besix Watpac liked “complex” projects.
“If it’s a bog standard project that anyone can do we can’t really bring value to it. We like to delve into that social infrastructure – health, education, we do a lot of work for defence and deliver all of Queensland’s major stadiums. We do office towers and apartment projects for key clients,” he said.
“The market, particularly in Queensland, is going to explode in the next five to 10 years and we are expecting to add a layer of Olympic infrastructure on top of an already significant work book.
“The government has money to spend so it’s great to be a Brisbane company. We have a good work book in front of us. We will grow steadily but we will grow profitably and sustainably and deliver projects and assets that are of use to a broader section of society.”
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