Abu Dhabi: Hundreds of employees including a number of managers at real estate developer Arabtec have been dismissed following the resignation of Chief Executive Officer Hasan Ismaik, sources have confirmed.
A source close to the company who asked to remain anonymous said the company is going through some re-structuring and is trying to cut down on costs.
On Monday, Arabtec ended the day’s trade on the Dubai Financial Market with a 9.90 per cent drop that saw prices at Dh3.46 – the lowest value since March. The company has already plunged 47 per cent so far this month.
Arabtec, which has the fifth-highest weighting on Dubai’s index, has plunged 48 per cent so far this month and 53 per cent from a record 7.40 peak in May.
The source added that Arabtec remains a strong company with leading projects, and such re-structuring should not impact the market, which as a whole is in the red.
Mohammad Al Hammadi, an economic researcher and independent investor, commented on the dismissals saying, “I heard there will be structural changes within the company, but I think what’s happening in the market is exaggerated. People think share prices will continue to drop, but that’s not true.”
He added that the government-backed company already has lots of iconic projects to its name, which is why investors should not worry about a change in staff.
“Those who were dismissed are bound to be replaced because the company needs employees to work on its many projects. Any company can change its staff, and that doesn’t mean there are problems with the company,” Al Hammadi said.
He continued, “Having investors sell their shares in Arabtec as soon as its share prices drop, shows that these investors have no faith in the strength of the market and its ability to bounce back.”
Lack of visibility
Discussing Arabtec’s performance, Sebastien Henin, head of asset management at The National Investor said, “Investors don’t like the lack of visibility. Recently, we’ve seen a lot of changes [in Arabtec]. Some investors want on the short term to exit, and when things are more stable, they will come back.”
He added that investors only buy stocks when they see stability in the company, but that has not been the case for some time.
“[Arabtec] is in a phase of re-structuring now. At some point they will have to communicate with the market, and discuss their strategies,” Henin said.
Last Wednesday, as Ismaik resigned, he said he will remain a board member, and that he does not plan to sell his shares. The former CEO currently owns a 28.85 per cent stake in the construction giant. He has been replaced by Mohammed Al Fahim, who is now the acting CEO.
Meanwhile, Abu Dhabi’s state-owned Aabar Investments owns an 18.85 per cent stake in Arabtec. The figure marks a reduction from its prior 21.57 per cent stake.
— With inputs from Bloomberg
