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SuccessStories Sucess Stories
EIC Survive & Thrive 20242024 EIC Survive & Thrive
July 2024 July 2024
Story type #diversification (main category)
Modutec A strategy of successful diversification through considered acquisitions
Benefits ▸ Company closer to a more balanced distribution of revenue among sectors. ▸ Revenues to surpass £42m in 2024.
Key findings
Brian Knowles
For industry
CEO
▸ Be transparent, from A to Z.
▸ Don’t oversell and underdeliver.
Modutec at a glance:
How is Modutec thriving? Modutec is currently enjoying the fruits of substantial endeavours over the past couple of years. Since charting a new strategic course in 2022 to broaden its horizons beyond the oil and gas sector, the company has completed several strategic, focused and synergistic acquisitions. With these moves having facilitated Modutec’s expansion into the defence and marine sectors, nearly half of the company’s business now stems from non-oil and gas operations, with revenues projected to nearly double in 2024 (£42m) compared to 2022 (£22m). The challenge - Established in 2002, Aberdeenbased Modutec has built a stellar reputation for its prowess in repairing, converting, and constructing marine and offshore living quarters alongside technical buildings. Boasting a workforce of 405 individuals and generating annual revenues surpassing £26m, Modutec has swiftly cemented its position as a prominent industry player in just 22 years, predominantly through its engagement in oil and gas ventures. However, as this rapid growth would suggest, Modutec by nature is not a company that’s willing to settle, nor stand still. Eyeing further growth in the post-covid era, the company sought to explore several possible avenues of new opportunity. Concerns over overdependence on oil and gas prompted a strategic shift towards diversification and market expansion into promising, high-growth sectors. However, coming into markets as a new entrant is never an easy task. The solution - In an effort to gain traction amongst new customer bases, Modutec has pursued several strategic acquisitions in recent times. In December 2022, the firm acquired Glasgow-based CO-AT Marine – experts in marine and offshore HVAC and refrigeration
solutions that create safe and comfortable environment on board ships and offshore structures in a cost-effective and reliable manner. Critically, the move for the HVAC services company bolstered Modutec’s HVAC and piping solutions capabilities, enabling it to better serve the international marine, offshore, renewables and onshore process sectors, with an additional 10 skilled personnel positioned throughout Scotland. Fast forward 16 months, and Modutec then also acquired SeaKing Electrical in April 2024. Indeed, the move to take on the Birkenhead-based enterprise and its 105 staff complemented the CO-AT acquisition, with SeaKing providing electrical engineering and installation services to customers in the marine, defence, renewables, and offshore sectors. The identification and acquisition of strategic entities such as these have required immense effort. Finding companies that not only resonate with Modutec’s strategic vision and culture but also facilitate the logical expansion of its skill sets has proven challenging. Modutec CEO Brian Knowles acknowledges that this strategic pursuit has consumed a significant portion – 80%, to be precise – of his time. Nonetheless, the early signs of success are unmistakable, indicating that these concerted efforts are already yielding tangible results. In 2019, approximately 95% of Modutec’s revenue originated from oil and gas operations. However, by 2023, this dynamic shifted to a more balanced distribution, with 65% attributed to oil and gas and 35% to defence/marine sectors. Moreover, with an annual income of £26m recorded last year, the company anticipates a substantial growth, projecting revenues to surpass £42m this year. Notably, half of this projected revenue is expected to be generated from marine and defence activities. Looking ahead, Modutec will also continue
Key products and services: repair, conversion and new build of marine and offshore living quarters and technical buildings. Main industries served: ▸ Oil and gas – 65%
▸ Others (non-energy): defence, marine – 35%
Headquarters: Aberdeen, UK Year established: 2002 Number of employees: 405 Revenue: £26m Revenue from exports: 80%
to further pursue acquisition opportunities. Currently, the company is in the planning stages of acquiring a third entity – a specialist in offshore wind vessel construction and/or transportation – in a new region of interest. This strategic move is poised to enhance Modutec’s growing portfolio of expertise. With ongoing consolidation efforts in emerging markets and the potential for further acquisitions on the horizon, 2024 is poised to be a pivotal year for the company, solidifying its position as a specialist in marine, defence, and oil and gas solutions.