DUBAI: Dubai’s Arabtec plans to sell four of its five Saudi Arabian units, the builder’s annual results show despite also stating that one of its main aims this year is to expand its activities in the kingdom.
The board of Arabtec, which is 36 per cent owned by Abu Dhabi state fund Aabar Investments and reported a surprise fourth-quarter loss on Sunday, has approved disposing of Arabtec Saudi Arabia, Arabtec Construction Machinery, Saudi Austrian Arabian Ready Mix Co and EFECO Saudi.
Arabtec owns stakes of between 45 and 62 per cent of these firms and has control over all of them. Selling the quartet would leave the builder with a solitary Saudi subsidiary — Saudi Target Engineering Construction Co, although it also owns 24 per cent of a Riyadh residential project.
The proposed sale comes despite a company press release accompanying its results stating: “The company’s plan [is] to continue expansion in attractive markets, mainly the Gulf region; in particular the Saudi market, and to study the expansion opportunities in other markets, taking into account the importance of the Egyptian market.” Streamlining Arabtec’s Saudi operations into a single business may make sense, especially after its board “expressed dissatisfaction” with surging general and administration expenses, which jumped 75 per cent in 2014 to 749.9 million dirhams ($204.2 million).
The four Arabtec units’ gross profit margin was 11.7 per cent, higher than Arabtec’s other operations, Naeem Brokerage wrote in a note.
“We are yet to hear from management on the reasoning behind the [proposed sale] and whether this would imply an anticipated spin-off situation,” Naeem added.
The four units’ combined profits fell by more than half last year to Dh120.3 million.
Arabtec, which was not immediately available for comment, values their net assets after liabilities at Dh860.5 million, according to its financial statements.