Arabtec profit soars on higher revenues and wider margins
SHORTER PAYMENT CYCLE FOR CURRENT PROJECTS BOOSTS CASH FLOW WHILE SLASHING DEBT
Arabtec reported a net profit for the third quarter of 2018 of Dh67.5 million, an almost fourfold increase on the Dh17.8 million reported in the corresponding period last year, on the back of rising revenues and wider profit margins.
The surge brings net profit for the first nine months of 2018 to Dh180.5 million — more than double the Dh75 million reported for the corresponding period in 2017, the Dubai-listed contractor said yesterday.
Meanwhile, revenues in the third quarter increased to Dh2.3 billion, up 11.5 per cent year-on-year. Revenues in the first nine months of this year were also higher, by 12.7 per cent, at Dh7.15 billion.
“Debtors days are continuing to decrease through our efforts to close out completed projects and shorten the payment cycle for current projects,” said Hamish Tyrwhitt, Arabtec’s chief executive officer.
“This has contributed to a further improvement in cash from operations and a Dh146 million reduction in net debt.”
‘Addressable opportunities’
He added that Arabtec is making progress in building a stronger presence in the infrastructure and industrials sectors, both of which “offer a strong pipeline of addressable opportunities, which we are well-positioned to pursue.”
At the end of September, Arabtec’s backlog of projects stood at Dh16.4 billion, it said, supported by a pipeline of identified opportunities worth Dh45.8 billion.
The contractor’s profit margins also improved from 0.8 per cent in the first nine months of 2017 to 2.6 per cent in the same period this year.
The jump in third-quarter earnings comes as the company undergoes restructuring, a programme that began in 2017.
Arabtec said it is currently in the second phase, which aims to ensure that it consistently secures a strong annual backlog of projects, ensuring ontime and on-budget project deliveries, and risk management, among other targets.
In a press statement on the financial results, Arabtec said it continues to simplify the business, moving towards 2019.
Reviewing non-core assets
“Arabtec continues to review non-core assets [that] are not considered key to the business for divestment or development,” the statement said, without elaborating on when it may sell any assets.
The construction company has already appointed Moelis & Co, it confirmed earlier this week, to advise and assist it with debt financial modelling, structuring options, and engagement with finance providers.
It also said it is on track to achieve its priorities for this year that include strengthening its regional footprint in the UAE, Saudi Arabia, Egypt, and Bahrain, as well as building a presence in the infrastructure space.
As for the market outlook, Arabtec said it expects to see growth in the UAE’s construction market, which it said it estimated at Dh155 billion this year.
The market is expected to reach Dh216 billion in value in 2023, Arabtec said as per forecasts, driven by rising oil prices, the Expo 2020, and government-supported infrastructure spending.
As for the market outlook, Arabtec said it expects to see growth in the UAE’s construction market, which it said it estimated at Dh155 billion this year. The market is expected to reach Dh216 billion in value in 2023, Arabtec said as per forecasts.