Arabtec results drag down Dubai index
dubai — A slump in shares of Arabtec dragged Dubai’s stock market lower on Monday after the builder reported a larger fourthquarter net loss, while other markets were mixed.
Dubai’s index dropped 1.8 per cent, its largest single-day decline since October 2015, after Arabtec plummeted by its 10 per cent daily limit having reported a net loss of Dh2.95 billion ($803 million) in the three months to December 31.
The loss was far larger than the loss of Dh272.8 million forecast by EFG Hermes and the loss of Dh403.74 million a year earlier.
Arabtec also said its board approved a proposed capital restructuring and a Dh1.5 billion rights issue, pending investor consent at the next general shareholders’ meeting.
Mohammed Ali Yasin, managing director of brokerage at NBAD Securities, said he believed the loss reflected measures taken across government-related entities. “This deceleration is the result of the due diligence between IPIC and Mubadala. They looked at the Abbar subsidiaries, which Arabtec is a part of, and they forced them to take the true provisions and impairments to start on a clean slate,” said Yasin.
Commodities shipper Gulf Navigation fell 3.6 per cent despite reporting a 20 per cent rise in fourth-quarter net profit, according to Reuters calculations. Full-year net income came in at Dh136.6 million, almost six times the figure for 2015.
In Abu Dhabi, the stock index edged down 0.1 per cent, with Eshraq Properties dropping by its 10 per cent daily limit after it swung to a full-year net loss of Dh575 million in 2016, versus a net profit of Dh1.61 million in 2015.
The developer said it had booked an impairment of Dh593 million on land values in 2016.
Dana Gas, which reported a drop in earnings last week, fell 7.8 per cent.
Saudi Arabia’s index added 0.5 per cent in thin trade with advancing shares outnumbering decliners 95 to 52. Most midsized petrochemical producers were bid up, as Brent futures traded around $56.50 a barrel. Saudi Industrial Investment Group climbed 2.9 per cent. — Reuters
dubai — Arabtec Holding, a leading contractor for social and economic infrastructure, reported on Monday a net loss of Dh3.5 billion and said it plans to raise Dh1.5 billion from a rights issue.
Posting its second yearly loss, the UAE’s biggest listed construction company said loss for 2016 widened to Dh3.41 billion from Dh2.35 billion a year earlier as a result of impairment charges on high-risk items, which amounted to Dh2.8 billion in total.
The company said in a statement to the Dubai bourse that revenue climbed 5.6 per cent to Dh7.7 billion. The mean estimate of eight analysts was for a loss of Dh580 million. Mohamed Thani Al Rumaithi, chairman of Arabtec, said the company’s board is taking confident, sensible step to underpin the firm’s capital structure “as we look ahead to a robust pipeline of business in the years ahead. Aabar Investments’ commitment to the rights offering represents a strong vote of confidence from our largest shareholder in the longterm future of Arabtec.” The company also announced that its backlog of existing and committed future projects stand at Dh18.1 billion, equivalent to two years of annual revenue.
Arabtec cited “impairment charges on high-risk items, recurring, non-recurring and operational expenses” for the loss and said the results reflect “adverse market conditions, which are having a negative impact on the construction industry” across the six-nation Gulf Cooperation Council.
Oil prices, the main source of revenue in the Gulf Arab region, dropped about 50 per cent since June 2014 forcing governments to cut spending. Economic growth in the UAE, the second-biggest Arab economy, probably slowed to 2.3 per cent in 2016, the lowest in six years, according to the median estimate of 10 economists compiled by Bloomberg.
Arabtec will also reduce share capital through a pro-rata cancellation of shares to wipe out accumulated losses to help the raising of new equity, according to the statement. The company’s largest shareholder Aabar Investments has committed to fully subscribe to its portion of the rights issue and any unsubscribed shares up to Dh1.5 billion.
Money raised from the rights issue will be used to “fund the completion of ongoing projects, support management’s business plan and provide financial flexibility to pursue growth opportunities.” Arabtec said it had an order backlog of Dh18.1 billion.
— issacjohn@khaleejtimes.com