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Arabtec swings to profitability in 2017

Construction firm reports Dh123m in profit, from Dh3.4b in losses in 2016

Image Credit: Virendra Saklanil/Gulf News Archives
An Arabtec construction site at Business Bay. The company said its backlog reached Dh17.2 billion as of December 31, 2017.
Gulf News

Dubai

Arabtec Holding reported on Wednesday Dh123 million in net profit for 2017 as the company swung back to profitability from the Dh3.4 billion in losses recorded in 2016.

The figure puts net profit in the fourth quarter of 2017 alone at Dh47.8 million, according to Gulf News calculations, marking the fourth consecutive quarter of profitability following nearly two years of mounting losses. Profits for the last quarter beat analysts’ expectations by around 21 per cent.

Revenues also grew in 2017, reaching Dh9.14 billion, an increase of 12 per cent year-on-year.

In a statement to the Dubai bourse, where Arabtec is listed, the company said its backlog reached Dh17.2 billion as of December 31, 2017, “with a solid pipeline” of tender opportunities going forward.

“…We have stabilised the business in 2017, creating a solid foundation that we will build on through 2018. Together with our core values, we remain committed to building a successful and sustainable future for Arabtec and all its stakeholders,” said Hamish Tyrwhitt, group chief executive officer of Arabtec.

Operationally, in the fourth quarter of the year, Arabtec won new project awards including a Dh950 million contract from Emaar Properties, a Dh1 billion contract from Dubai Properties, and a Dh250 million contract from TAV Tepe Akfen Construction.

Marwan Shurrab, head of high net worth and retail equities at Al Ramz Capital, said the outlook for Arabtec was positive, driven by the capital restructuring programme, which has helped the company turn around its financial performance.

In 2017, Arabtec implemented a capital restructuring programme that saw the company reduce its capital to Dh1.5 billion to extinguish Dh4.6 billion in accumulated losses. It was followed by a Dh1.5 billion rights issue. Arabtec’s capital currently stands at Dh1.5 billion.

“Revenues have gone up, and operational income has gone up, so at the end of the day, the company is not only winning new awards, they’re also making better margins on them, so this is impacting the overall profitability of the company and putting it in a much better position than where it was almost a year ago,” Shurrab said.

Shurrab pointed that Arabtec has also been able to get new projects on top of the ones it is currently constructing, ensuring a revenue stream.

In its statement, Arabtec said it continued to leverage synergies from its investments in the fourth quarter of 2017.

Arabtec’s share prices ended the day 2.86 per cent higher to reach Dh2.52 as buying activity remained subdued amid uncertainty due to volatility in international equity markets.

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