Arabtec earnings more than triple as company focuses on core business
Arabtec, the UAE’s biggest contracting group, said first-quarter net profit more than tripled as the company realised benefits of a recapitalisation programme to reduce accumulated losses and construction activity in the region picked up.
The contractor said net profit attributable to the owners of the company for the first three months of the year surged to Dh63.6 million from the year earlier period, according to a regulatory filing with the Dubai Financial Market, where the company’s shares are traded.
The “results reflect the positive impact of our various transformation initiatives”, said Arabtec chief executive Hamish Tyrwhitt.
“Strengthening governance still remains our key priority through rigorous project and business performance reporting, with a strong emphasis on cash, collection of receivables and closing out legacy projects.”
The stock surged on the news, closing up 8.7 per cent on the DFM.
Arabtec “will look to divest or develop non-core assets and investments” this year to further strengthen its balance sheet, Mr Tyrwhitt said.
Revenue for the quarter rose 10.7 per cent to Dh2.4bn year on year and the construction firm said it had a project backlog worth Dh16.2bn. It also said it had a pipeline of “tenders submitted or under preparation” in its primary market, the UAE, worth Dh16bn.
Last year, Arabtec completed a recapitalisation programme by raising Dh1.5bn through a rights issue and reduction of capital to cancel nearly Dh5bn of accumulated losses from previous years, when construction activity slowed down in the wake of a three-year oil price slump.
The company won a number of contracts last year that include the UAE’s Expo 2020
Strengthening governance still remains our key priority through rigorous project and business performance reporting HAMISH TYRWHITT Chief executive, Arabtec
Dubai pavilion. In the fourth quarter of 2017, it finalised a Dh950m contract with Emaar Properties and a Dh1.025bn contract with Dubai Properties.
The contract wins helped the construction giant swing to a net profit for the full year 2017, reaching Dh123.1m, compared with a net loss of Dh3.4bn in 2016.
Contracts won in the last quarter include a phase of Damac Properties’ Akoya Oxygen development in Dubai, and a Dh433m Dubai Municipality infrastructure project.
The latest results add to momentum the company built up over last year, when for the 12 months to December 31 it swung to a net profit, beating analysts’ expectations, as the UAE’s top-listed contractor continues to turn a corner amid a resurgence in infrastructure projects in Dubai.
Net profit attributable to equity holders in the 12 months reached Dh123.1m compared with a net loss of Dh3.4bn in 2016. Revenue grew 12 per cent to Dh9.1bn from Dh8.2bn a year earlier.
The company, in which Aabar Investments holds a 37.7 per cent stake, did not provide a breakdown of fourth-quarter figures in the preliminary results.
The full-year results beat the mean forecast of Dh102.6m, according to a Bloomberg poll of five analysts.
The company’s projects backlog stood at Dh17.2bn at the end of last year.
“Reinforcing our commitment to return to growth and deliver on our strategic roadmap, we Reuters have achieved four consecutive quarters of profitability,” Mr Tyrwhitt said at the time.
“With the support of our employees, board, shareholders and other stakeholders, we have stabilised the business in 2017, creating a solid foundation that we will build on through 2018.”
In January, Emirates Falcon Electromechanical Company, a wholly owned unit of Arabtec, won a Dh250m contract for an Emaar-led project in Dubai.
Efeco won the contract from Turkish TAV Tepe Afken Construction, which is overseeing work on two residential towers in the Opera District being built by Emaar Properties, the UAE’s biggest publicly traded real estate developer.
The company will carry out mechanical, electrical and plumbing works for towers A2 and A3, comprising 809 apartments and a shared basement in Plot A of the Opera District in Downtown Dubai.
Work is expected to start this month and take 34 months to complete, Arabtec said.