The winner of this year’s Building Award for Chief Executive of the Year is Charles Banks, boss of materials firm Wolseley – a man whose calm manner belies his amazing track record and aggressive hunt for acquisitions.
Charles Banks is a calm and considered man, which is perhaps surprising considering he is responsible for a £10bn business. As chief executive of materials company Wolseley for the past four years, he is running the biggest firm in the UK quoted construction sector.
In the past, the 64-year-old American has kept a low profile, quietly building up the plumbing and distribution business. But Banks has a lot to cheer about, most recently the fact that he impressed the panel of judges at Tuesday’s Building Awards so much that he was named chief executive of the year, an award sponsored by KPMG.
Sales and profits at Wolseley have risen to record levels since Banks has been at the helm and the share price has doubled to more than £11. Those who dismiss the company as being on the sidelines of the industry are wrong. This firm’s financial success speaks for itself – Wolseley has a market capitalisation of £6.5bn. Not only has it made it to the heights of the FTSE-100, but it has made it into the top 50 in terms of market capitalisation and profitability, racking up a profit of £598m in the last financial year. Turnover also exceeded the £10bn mark for the first time, £2.1bn of which was in the UK. Few would argue with that performance.
With such a strong track record it is unlikely that Banks will call it a day when his contract comes up for renewal this summer. He has been at the helm since May 2001 and has impressed peers, analysts and investors alike. While announcing yet another set of record interim results in March, he told analysts that he had no intention of leaving – not least because his wife was happy living in the UK.
High on his agenda is expansion in North America. The US accounts for about 60% of turnover but only has 9% of the market, leaving a big opportunity for growth, organically and through acquisition.
Banks is not shy of buying up firms. He has been hot on the acquisition trail since the beginning of Wolseley’s financial year on 1 August. Since then, the company has spent £260m on 18 acquisitions, which are expected to contribute almost £490m to group turnover in a full year. Of course, Banks and the company will be judged by the success of the enlarged business, but he is confident that it will develop the business in terms of profit and turnover. He has set targets of 10% a year in both areas.
He sees plenty of opportunity in the market today. In an interview with Building last November, Banks identified the repair, maintenance and improvement market as the motive force of the UK business. He was characteristically relaxed about prospects for the housing market, saying that exposure to diverse sectors, including the commercial field, aided the company’s risk profile.
Banks’ background goes some way to explaining his approach. Banks spent much of his childhood moving around America, following his father, who was a shop manager. Eight schools in 12 years strengthened his character and taught him how to up sticks and settle in new environments. After graduating from Brown University in Providence, Rhode Island, on the east coast of America, he spent two years in the US navy where he rose to lieutenant and gained his first experience of managing a team. Colleagues say he started at the bottom of the ladder, working his way up to join Wolseley’s board in 1992 as boss of Ferguson, Wolseley’s American plumbing supplies arm. He came to the UK as chief executive in 2001.
It says it all that the City and the banks are not alarmed by his acquisitive nature. He is considered bolder than other chief executives but not reckless. He takes risks and has adopted a much more international stance but his decision-making is well thought out and, most importantly, pays dividends. The share price, and this award, reflects that success.
Banks beat strong competition from the five other bosses shortlisted for the award (David Pretty of Barratt Developments, Pat Stanborough of T Clarke, Peter Johnson of George Wimpey, Sir Peter Mason of Amec and Alan Murray of Hanson). The panel of judges was staggered by the phenomenal financial performance of the company under Banks' leadership. The figures speak for themselves, but the understated American that drove the business to such heights made a big impression on the panel too.
They described Banks as “a class act” and were impressed by his “great” leadership skills. Banks, according to colleagues and observers, is a big believer in leading from the front. By doing so, he has gained tremendous support from his staff who are inspired by his obvious passion for the business.
Banks comes across as a straightforward man with a deep sense of honesty. The judges felt that his commitment to strong financial ethics made him a good ambassador for the construction industry as a whole. It is likely that, as with most things, he will take such praise in his stride.
The Wolseley empireTurnover £10.1bn (up 23.2%*)
Pre-tax profit £598.1m (up 31.2%*)
Total dividend 23.8p a share (up 12.3%*)
Share price £11.06**
Market capitalisation £6.5bn**
3600 branches in 13 countries in Europe and North America
* Compared with 2002/03
** As Building went to press
Banks on …
Plumbing is not a glamorous business. I tell people at parties that I'm a toilet distributor, then I wait to see their reaction
Building the company's profile
I was told: ‘Charlie, if you stick your head up, people will want to shoot it off.’ But we have thousands of investors and we have an obligation to let them know how we are doing
His ambitious acquisition drive
Part of the key to growth is that we have to do acquisitions, and that is the foundation for future organic growth, and it allows us to broaden our customer base, our geography and our products
His strong work ethic
I get that from my mother, who came from a Scottish-Irish family in Carolina. She was tough, one of 10 children. You were expected to perform well
If you look at the projections for the UK economy, US construction and US jobs, we still feel good