Dubai: Arabtec Holding, the Dubai-listed construction firm, reported on Wednesday a 50 per cent plunge in its profits for the first quarter of this year as it recorded some losses on one of its investments.
The company also announced that its chief executive officer, Hamish Tyrwhitt, has stepped down from his position, and will be replaced temporarily by chief financial officer, Peter Pollard.
Arabtec did not provide details on why Tyrwhitt is stepping down, but the board of directors thanked him in a statement for his efforts. The board said Pollard, who will take on the role of acting CEO “has been instrumental in driving the company forward, in line with the group’s strategic priorities.”
“Peter (Pollard) will continue to focus on aligning our business, with the UAE’s national agenda, productivity, efficiency, and innovation being key drivers in positioning Arabtec as a competitive business, and developing the future Emirati leaders who joined the group during 2018,” the board said.
In a separate filing to the Dubai bourse, Arabtec said that profits attributable to the parent company reached Dh30.2 million – halving from the Dh65.8 million reported in the first quarter of 2018. Revenues also slid by 16 per cent to reach Dh2 billion in the quarter.
This came as the company incurred a Dh7.8 million loss from investments in an associate, compared to a Dh1.7 million gain on that investment in the first quarter of 2018. Arabtec said that loss came entirely from its investment in Depa, the Nasdaq-Dubai listed construction firm.
Tyrwhitt who also served as CEO of Depa stepped down from that position on May 1, but remained on Depa’s board as a non-executive director.
During the first quarter of this year, Arabtec’s profit margins contracted to 1.5 per cent from 2.7 per cent. It blamed that on “lower revenue from a slowdown in awards in the construction sector, coupled with a number of legacy projects closing out in the coming months.”
Still, the first quarter marks another consecutive quarter of profitability for Arabtec, which recorded nearly two years of mounting losses in 2015 and 2016 before it restructured. Part of the restructuring involved hiring Tyrwhitt as CEO in late 2016, and under his management, Arabtec reported more than two consecutive years of profitability.
Tyrwhitt’s strategy saw the company sell some non-core assets to focus on its core operations, as it also strengthened its balance sheet, and cut costs.
Backlog at the end of the first quarter stood at Dh14.8 billion, Arabtec reported.
New CEO Pollard said in a statement that Arabtec “remains confident” that it will see more project awards in the coming quarters across the construction and industrial sectors.
“We continue to focus selectively on countries that offer a strong, sustainable pipeline of construction, infrastructure, and industrial opportunities, including the United Arab Emirates, Saudi Arabia, Bahrain, Kuwait, and Egypt,” he said.
Arabtec’s share prices fell on Wednesday, ending the day with the largest percentage loss on the Dubai bourse. Its share prices slid by 7 per cent to close at Dh1.72.