Arabtec swings to Dh2.35b annual loss
Dubai - Revenue plunged to Dh7.3 billion, down Dh1 billion or 12 per cent, from 2014, the Dubai-based company said in a statement. It cited the "difficult environment that the regional construction market is facing" for the loss and said it is seeking to further reduce costs.
By Issac John
Published: Sun 21 Feb 2016, 11:00 PM
Last updated: Mon 22 Feb 2016, 8:05 AM
Arabtec Holding reported on Sunday its first annual loss, signalling a general slowdown in the country's construction sector.
The company, the biggest contractor in the UAE, posted a net loss of Dh2.35 billion or 51 fils per share, compared with a profit of Dh214.6 million, or five fils a year earlier.
Revenue plunged to Dh7.3 billion, down Dh1 billion or 12 per cent, from 2014, the Dubai-based company said in a statement. It cited the "difficult environment that the regional construction market is facing" for the loss and said it is seeking to further reduce costs.
"The company is seeking to reduce its cost base even further in 2016 in addition to the annualised cost savings previously announced," the statement said.
"Due to the backdrop, the group is even more focused on maintaining its working capital position and ensuring collection of its receivables. Accordingly, all of the group's entities are vigorously seeking full recovery of receivables due and where necessary enforcing the group's rights where payments are not made," it added.
For the fourth quarter, the company reported a widening net loss of Dh360 million. This compares with a loss of Dh94.4 million in the corresponding period of 2014.
The firm, whose largest shareholder is Abu Dhabi state-owned fund Aabar, attributed the widening losses in the preceding four quarters to increased costs.
An analyst at SICO Bahrain had forecast Arabtec would make a quarterly net loss of Dh123.6 million.
Saeed Al Mehairbi, chief executive of Arabtec, pointed out that 2015 has been a difficult year for all regional construction companies given the uncertain economic backdrop. "Accordingly, the company's continuing cost reduction programme is ensuring that the operations are suitably lean without affecting our leading client service."
"In addition, the group is executing a more selective approach to project tendering, ensuring new projects deliver appropriate returns and, in turn, long-term shareholder value," he said.
Arabtec has undergone major turmoil over the past two years, with the departure of its chairman and most senior management even as a much-touted $35.8 billion project to build one million homes in Egypt failed to take off.
The company said its backlog is worth Dh19.3 billion and it is continuing to win work.
Arabtec, which is building a branch of the Louvre museum in Abu Dhabi, said it has received letter of intent from the ministry of transportation in Bahrain for a $1.1 billion joint venture with TAV Construction. Last month, the company was awarded a Dh2 billion contract from Aldar Properties to build 1,017 villas.
Arabtec shares had slipped more than 38 per cent in the past six months, falling below Dh1 in December 2015, when it made a 52-week low of Dh0.93 per share. The shares are up more than a fifth (21 per cent) since then.