Thierry Ehrenbogen – Chairman, SDV (Bolloré Logistics) – France
The CEO of SDV (Bolloré Logistics), a global leader in supply chain management, discusses his company’s continued presence in Africa and response to pressures from clients.
Less than six months ago, you became chairman of SDV, after successfully managing its European division for several years. Which agenda priorities will emanate from the mandate that the board has commissioned you for and what is the importance of the oil and gas sector today for SDV?
SDV is the main brand of Bolloré Logistics, a business unit gathering freight forwarding and logistics activities within a new organization entitled Bolloré Transport & Logistics. It stems from Vincent Bolloré’s (founder, chairman and CEO of the Bollloré group) decision to reconfigure the overall transport & logistics division of the group. Bolloré Transport & Logistics division which is headed by Cyrille Bolloré is made up of four business units: Bolloré Logistics, Bolloré Ports, Bolloré Railways and Bolloré Energy. Last year alone Bolloré Transport & Logistics reached a turnover of EUR 8.5 billion (approximately USD 9.7 billion) and employs a staff of 36,000 in 102 countries.
My priority is to capitalize on our favorable position in the African continent to strengthen our presence in new geographic locations. Our oil and gas activity represents 10 percent of SDV’s revenues. It is therefore an important growth component, which is currently growing at a 7 percent rate – I would say that this is in line with our overall activity.
Steve Harley from DHL Energy highlighted back in 2012 the unprecedented evolution of the sector referring to the increasing importance of offshore projects and the associated challenges to overcome (remoteness, difficulty of environment..), but also the increasingly complicated extraction procedures. How does SDV remain a market leader given this increased complexity?
I tend to say that SDV has always been accompanying its clients in remote locations and throughout challenging projects, and we have a track record doing so. We devoted ourselves to accommodate technical complexities incrementally throughout the company’s history. We are for instance perfectly suited to provide logistics solutions for an LNG project in northern Russia under freezing temperatures, and were pioneers in developing services for virgin territories in Africa or Indonesia just to name two.
How is Bolloré Logistics addressing the current market meltdown?
We must remind our audience that the Bolloré Group is managed by an entrepreneur who invests considerable funds and efforts into his own company. We therefore have the privilege of addressing market trends and dynamics with long-term solutions, which contrasts with certain competitors who must answer to pressures exercised by financial players, institutions and shareholders. The Bolloré Group is very involved in the oil and gas sector thanks to its overall energy business unit, which distributes fuel in various European countries. We have obviously implemented various measures to introduce more flexibility within the company, but overall, the company defines a robust strategy ahead of the short term. We reduce costs in peripheral activities but we maintain all our assets and operational tools. The Bolloré Group therefore accommodates the current slowdown with patience and serenity.
Furthermore, QHSE has prevailed as an essential component of our business philosophy. We therefore make no compromise on ethics, safety and compliance. Vincent Bolloré who has displayed this commitment for more than thirty years champions these values. In a few countries for instance, where there was more room for non-compliance, he has ensured that QHSE was enshrined within our mentality. In regards to our clients, they are obviously more sensitive and more inclined to introduce cost-reduction measures and are therefore consulting SDV even more than in the past in order to determine the most effective solutions for logistics. During economic slowdowns, our clients take the time to sit down with us, browse through our solutions, anticipate challenges and prepare certain logistic aspects in advance to save costs. Formerly, our main clients use to solicit our services for a specific task. Nowadays, they usually require our solutions for the entire duration of a project.
As you mentioned, the group used to have a more geographic approach and had its own African entity: Bolloré Logistics Africa. As the African continent is growing at an average rate of 5.7 percent and FDI is growing at an even higher rate, how will the group further capitalize on these promising figures?
The Bolloré group has been investing considerable funds in Africa for several decades. The emergence of new actors who have recently discovered Africa’s growth potential has led us to increase the investments to foster the capacity to accompany every new player wishing to establish its services in Africa. Our clients are enhancing their ambitions on the African continent, and we must therefore strengthen our supply chain capabilities to match this growing demand. We have in that regard recently won an important contract on behalf of ENI in Congo, which supposes large investments on our behalf. The Bolloré Group has also successfully penetrated the Eastern African market. We currently employ 800 professionals in Mozambique for instance.
Vincent Bolloré enjoys profound affinities with the African business community. How does the Bolloré label contribute to winning contracts in other parts of the world?
Since the 1990s, Bolloré has built various oil and gas teams according to geographic region. Our objective is to achieve highly profitable growth by targeting markets. We refuse one-stop shopping because we recognize that we can’t be competitive in every segment across the globe. We therefore carefully analyze different markets in order to understand which Bolloré competency holds the most attractive competitive advantage in a given region. Bolloré is very involved in oil and gas but is also very much present in other industries such as mining, aerospace and FMCG. Our group has developed core competencies in each domain in order to increase our versatility. We have in this regard allocated significant funds to revamp our oil and gas hubs, notably in Singapore and Houston. Aberdeen, Norway, DubaÎ are also strong points of SDV’s oil and gas network. Our teams specialized in the oil and gas industry work closely together when delivering solutions for global players such as Halliburton.
Across the Atlantic, the market seems to be dominated by national players. Your predecessor Herbert de Saint Simon mentioned a potential acquisition in the United States. Is the objective of strengthening your position in North America still a priority?
SDV employs 400 people across the United States. We recently unveiled a USD 40 million investment plan in our Houston hub, which illustrates our commitment to further our presence across the Atlantic. To make first-contacts with global clients, we obviously rely on our global network in Africa to gain an edge. Once an introduction is made however, SDV is capable of delivering quality services worldwide. In the Asian-pacific region, we have established a true oil and gas focused business unit, which works on all types of contracts for companies like SBM Offshore, Technip or Saipem. In Asia, similarly to Africa, our administrative teams are coupled with physical sites where our equipment is stored.
Is external growth an essential component to expand your market, knowing that SDV underwent a wave of acquisitions in the 2000s? And what constitutes the ideal company profile for an acquisition?
We have indeed completed several acquisitions recently but not necessarily related to the oil and gas industry. We consider that our oil and gas network is fully developed. However, in other sectors, we are still targeting acquisitions to address new markets. We are currently targeting Scandinavia and finalizing a deal in Egypt also. There are other countries, where we capitalize on acquisitions to strengthen our positions, in Latin America and Brazil notably. Again, our primary objective is to achieve profitable growth, instead of obsessing on market shares. When we seek an acquisition, we analyze complementarities in terms of expertise and philosophies. If our values do not align in regards to entrepreneurship and humility, we will not pursue a transaction any further. We will never complete an acquisition to simply fill in a gap in a country. There must be synergies with the target’s executives, and a common and coherent vision for a long-term project.
How would you define the French specificity in the oil and gas industry?
I think that observers have an erroneous perception of the French market. Besides the United Kingdom, France’s labor market and business appeal is comparable to every other European country. Norms and regulations aren’t more flexible in Germany or Italy. As I travelled the world, I garnered a better grasp of the French entrepreneurial spirit, which fully exists despite what you hear from politicians. There are several very dynamic French SMEs expanding globally. However, SDV is an international company, which employs talented and qualified professionals from all origins, and we therefore focus more on competencies rather than cultural backgrounds.