With Ramboll Environment & Health (E&H) managing director Tom Vetrano handing over the reins to Jesper Dalsgaard, EA hears from the pair on managing the leadership transition, driving the business forward, and why the acquisition of O’Brien & Gere in the US is so important.
Leadership change
Last week Ramboll announced that Vetrano – who has steered the business for 15 years (including his time with the legacy Environ business) – will be standing back to pursue other activities within the firm. Stepping into his shoes is Jesper Dalsgaard, the former managing director of Ramboll’s buildings business. Dalsgaard will inherit an E&H order book of $266m to keep him busy.
However, Vetrano will stay at Ramboll in an advisory role to his successor, alongside another assignment to lead a number of client development initiatives as part of a strategic effort to target and maintain major contracts. He will also set aside some time to act as a mentor to help develop upcoming leaders within the business.
Speaking to EA on his first day at the helm of E&H, we asked Dalsgaard what his ambitions are for this business unit. Coming from within Ramboll’s core buildings division, he has aspirations to help E&H to grow its end-to-end capabilities and leverage Ramboll’s more traditional skills in front-end design and commissioning. He also wants to continue Vetrano’s work in expanding Ramboll E&H into the Americas and Asia.
Growth trajectory
Solid performances in the US, UK and Asia led Ramboll to post organic group revenue growth of 7% to DKK11.4bn ($1.74bn) in 2018 - marking a record year (EA 20-Mar-19). Strong momentum from some of the firm’s youngest markets helped to offset a slowdown in its traditionally Nordic territories of Denmark and Sweden, alongside its global energy practice.
Ramboll’s 2,400-strong E&H business posted gross revenue growth of 9% and net revenue growth of 6% to DKK2.7bn (US$418m), accounting for a stable 24% of the group net total. And of Ramboll’s total earnings, E&H contributes 30%, leading Vetrano to hails it as a "significant piece of the overall Ramboll business".
Ramboll E&H makes up approximately two-thirds of the group’s worldwide environmental consultancy offering, with additional EC services also delivered through the water and energy business units. According to Environment Analyst’s latest global market assessment and competitor analysis report, the firm’s EC revenue total - of in excess of $600m - ranks it as the eighth largest such provider, and the third largest in Western Europe (EA 09-Jan-19).
Whilst the global market for EC services in its entirety is certainly more buoyant than it was a few years ago, Vetrano claims a big part of Ramboll’s recent success in this area is also down to the ability of the E&H team to continue squeezing synergies from its acquisition of Environ (EA 17-Dec-14).
It may seem incredible that untapped synergies are still emerging more than four years later, and is a testament to how transformative this particular deal was. Not only did Environ double the size Ramboll’s environmental consultancy contingent overnight, it also opened up completely new markets for both businesses. Prior to the merger, Ramboll had very little presence in North America and Asia (Environ’s stomping grounds), and Environ was light in the Nordics, Middle East and India (where Ramboll had established itself). Then consider Environ was a specialist in environmental and health science, while Ramboll was better known for design and master-planning, and it's easy to see why the pairing has been fruitful.
"The reality is we are starting to better leverage the services across the Ramboll platform." says Tom Vetrano. "Historically, the legacy E&H (Environ) business was not part of a global engineering platform. So we have been driving collaboration across Ramboll’s different markets - and the opportunities continue to develop."
Dalsgaard attributes at least part of E&H’s success to the positioning of ‘environment’ at the heart of what it does as a group business. After ‘buildings’, E&H is Ramboll’s second largest single business unit, out-competing even its transport infrastructure business. As such it is not a peripheral service that supports other areas of the business, it is front and centre.
Brave new world
At the end of last year, Ramboll took a giant leap towards cementing its presence in the US with the acquisition of the 900-strong O’Brien & Gere (EA 17-Dec-18). The purchase was hailed by the company’s directors as a "strategic milestone" almost doubling the firm’s presence in the US and taking is a step closer to realising its ambition to offer Ramboll’s full suite of services to the world’s largest economy.
OBG added 300 US experts to its energy business, 300 experts to its water business and another 300 experts classed as E&H. Of the 2,000 staff distributed in the US and Brazil, 1,400 are now in Dalsgaard’s E&H business, making it by far the predominant business in Ramboll’s Americas operation. In 2018 Ramboll’s group revenue generated from North America grew by 10.5% to stand at DKK1.4bn ($218m).
"Historically, Ramboll’s Americas presence has just been legacy Environ, alongside some small energy and water additions," said Vetrano. "But the OBG addition changes that, allowing us to build a platform that is great for growth, but will also give us a broader range of services to offer clients in energy and water infrastructure markets. It should allow Ramboll to win more multidisciplinary projects in the US."
But Ramboll does not want to stop there. The firm believes it has more gaps to close, particularly if it is to deliver its ‘Liveable cities’ concept at scale. There firm aims to replicate what it has been doing across four major Nordic cities [Copenhagen, Oslo, Stockholm and Helsinki] in delivering sustainable urban design centred around transport, housing and communities. But to do that Ramboll wants to invest in more planning and impact assessment capabilities either through recruitment or acquisition. Should the concept of liveable cities gain traction among US city mayors, it will also help rebalance Ramboll’s client portfolio in the US, where 85% of income currently comes from the private sector.
"All four cities have sustainability ambition and a willingness to invest to allow them to adapt to the next wave of societal and environmental challenges," says Dalsgaard. "Crucially they have acted consistently and coherently to develop together and we think that model can work really well across the US."
In the medium term Ramboll has also set its sights on a "medium-sized" acquisition in the energy space to bolster its presence in this increasingly buoyant area of the US market.
International opportunities
The UK was another market in which E&H – and other Ramboll business units – performed strongly in last year. The 1,250-strong UK group contingent achieved revenues of DKK1bn ($157m), up 15.2%. The firm has won positions on some large public sector framework contracts, including Highways England’s regional delivery partnership framework for schemes in the south west region over the next six years (EA 20-Nov-18). It also won a role on the Stansted Airport transformation scheme.
"To date we have not been impacted significantly by Brexit," says Vetrano. "The diversity of our client base and service mix shields us from serious overall negative impacts when downturns or adverse events occur in one sector or market. While the pace of deals and property sector work has slowed somewhat due to the uncertainty surrounding Brexit, the UK business has actually had a very strong year posting strong revenue and organic growth, and is building strong synergies to the Ramboll UK business."
"Once this uncertainty is removed, the fundamental demand across our UK markets is still strong and investors view UK as a low-risk environment, even post-Brexit. The timing of any delay to a known outcome is the issue for our industry in the UK, not necessarily whether it is a hard or soft Brexit."
Back in Ramboll’s home region of the Nordics the company’s performance has been a little more tempered. The 2018 acquisition of Swedish environmental education and digital compliance platform RSM&CO added 70 staff to E&H’s Nordic outfit (EA 21-May-18). Aside from this the firm is hoping to continue introducing its health sciences and compliance offerings and leverage renewed interest in waste management and the circular economy.
Outside of these markets, E&H has courted interest from international development clients and global financing institutions for environmental, health and social impact assessment services. So much so the firm has launched an impact assessment global spearhead in order to leverage its skill base in Europe and the Nordics and drive into international markets, particularly sub-Saharan Africa and parts of Asia.
Going forward, Dalsgaard has set the business to an ambitious target: "We have been recording double-digit growth for the last few years and I don't see any reason for that to stop. Ten percent growth over the next three to four years takes you to 35-40% growth in revenue and staff. That would be quite an achievement and is something to aspire to."