Al-Khodari Sons Company structure

Saudi Arabian contractor Abdullah AM al-Khodari Sons Company has grown consistently since 1966, when Sheikh Abdullah Abdul Mohsin al-Khodari founded the firm in the northern city of Arar to specialise in road construction.

The oil boom of the 1970s saw the firm expand into new sectors, including industrial infrastructure, bridges and buildings, as well as establishing its head office in Dammam. By the 1980s, it had moved into waste collection and environmental cleaning first, in Al-Khobar and later in Dammam, Medina, Riyadh and Jizan. The company’s transport, logistics and trading units grew in tandem, supporting the expanding contracting business. They now function as business divisions in their own right.

The founder passed away in 1991 and the business became a limited partnership under the second generation of the family, including three Al-Khodari brothers, before later becoming a joint stock company. In October 2010, 30 per cent of the firm’s shares were floated on the Saudi stock exchange, the Tadawul. The initial public offering (IPO) was oversubscribed and today the share price is performing above the SR48 ($12.8) launch price, closing at SR54.25 as MEED went to press.

In 2009, Al-Khodari recorded revenues of SR1.04bn ($277m) and posted profits of SR217m. The chief executive officer is Fawwaz Al-Khodari, who joined the business in 1988.

Al-Khodari Sons Company operations

Al-Khodari is today a 10,000-employee-strong general contractor, covering the entire kingdom and operating in several overseas markets.

The contractor has expertise across all major construction sectors, including environmental services, road, rail, buildings, water and waste. Clients vary from government ministries, such as the Interior Ministry, Higher Education Ministry and Water and Electricity Ministry, to Saudi Aramco and the General Authority of Civil Aviation.

Al-Khodari supports its projects with its trading division, selling building materials, machinery, equipment and electrical items, giving it significant advantages in the market in terms of efficient sourcing of building commodities.

Day-to-day operations at the firm are run by an eight-member executive management team overseen by a six-person board, which contains two independent members. The senior management team oversees the business divisions, which are organised by sector.

Al-Khodari Sons Company ambitions

Al-Khodari has a clear vision moving forward. Rather than chasing top line growth at the expense of its margins, the firm is carefully expanding into sectors that fit with existing operations, allowing it to maximise the benefits to the company.

With Saudi Arabia steadily pursuing its privatisation programme in the water and wastewater sector, Al-Khodari is keen to support the government by using its construction and operation and maintenance expertise.

It is also planning to further its growth in the power sector, where independent power projects (IPPs) are well established as a means to meet soaring power demand in the kingdom. Saudi Electricity Company forecasts power usage will reach 75,155MW by 2020, compared with about 42,000MW today. It is investing more than $20bn in five new IPPs to meet this demand. Working with international contractors on major projects such as IPPs is a key ambition for Al-Khodari, which feels it could offer valuable local support.

Major contract wins continue to come from the firm’s core sectors, where it also wants to maintain growth. Several contracts for road and airport schemes have been signed over the past few months, including a $50.4m road project for the Transport Ministry in Najran. Its most recent contract award came in December to build the cathode sealing and anode pallet storage buildings at Saudi Arabian Mining Company’s Ras al-Zour aluminium smelter. The value of the contract was SR91m. Although the firm has extensive experience of overseas markets, Al-Khodari acknowledges there is scope for further expansion and is carefully watching development in neighbouring states, such as the UAE and Qatar.

At a meeting in December, the board approved plans to establish a branch in Abu Dhabi. Previously, the company has undertaken schemes in countries including Ghana and Lebanon.