Dubai: The construction major Arabtec’s losses widened in the second quarter to total Dh998.1 million in the first-half of this year, compared with a net profit of Dh240.3 million same period in 2014. Losses in the second quarter specifically was Dh718.3 million, against a net gain of Dh102.4 million a year ago.

But the company is looking to put this period of extreme stress behind it at the earliest, confirming that it has ‘identified a number of poorly performing projects and is taking corrective action in response to these legacy issues’, it said in a statement issued to Dubai Financial Market. ‘The implementation of the more conservative approach to revising revenue, costs and profits, in addition to fully reflecting the findings of the Board’s operational review in the group’s financials have impacted the H1-2015 results.’

It will also look to secure its medium-term foundation with a project backlog valued at Dh20.2 billion and deemed as ‘healthy’.

The ongoing reassessment across its operations to conform with the new realities is also reflected in the company’s revenues from continuing operations. For the first six months, these were Dh3.59 billion, down 4.1 per cent. Specific to the second quarter, revenues of Dh1.8 billion were down by 8.1 per cent.

“The Board of Directors has undertaken a careful review of its accounting policies in respect of recognizing revenue, cost and profit and adopted a more conservative approach than that previously used,” Arabtec said in the statement. (This was first confirmed at the time of the group’s Q1 results.)

“The Board has also undertaken a full review of the reported contract positions compared with its internal commercial assessment of project performance up to June 30, 2015 and forecast project performance through to completion; and the overall level of contract risk provisions in the business in light of any and all identified operational issues,” it added.

According to an investor in the company, “Attention will now shift to both top-line items — such as Egypt — as well as liquidity variables — receivables and cash. The ability of the company to navigate through extended payment terms will be the key factor going forward.

“The company remains a fundamental buy; however it is one that has had high management turnover and boardroom turmoil in recent months and investors will be increasingly critical of its turnaround progress in the coming months.”

To quieten investor disquiet over senior management changes all through the recent past, Arabtec in its latest statement also said: ‘The group has taken action to strengthen the management... including the appointment of a new acting group chief financial officer. This appointment, together with a number of other internal appointments, have resulted in a more streamlined structure and improved operational decision making.’

Shareholders are still chary of where all this will head to — “While the restructuring efforts are laudable, it is noteworthy that most companies in the midst of such a restructuring exercise takes pains to walk the shareholders and analyst community through what is in store by constantly engaging with them and guiding expectations higher or lower. This has not happened here (with Arabtec) and is reflected in the sharp moves of its’ stock price.”