- Arabtec confirms losses of AED278.9m
- Total revenues remained stable at AED1.8bn
- The first four months of this year saw the second-lowest level of contract awards in the Middle Easts construction sector since 2008
UAE contractor Arabtec Holding has recorded a dip in profits in the first quarter of 2015, as its difficult year continues.
The company confirmed first quarter losses of AED278.9m, compared to a net profit of AED137.9m in the same period last year. Revenues remained stable at AED1.8bn compared with the same period last year. Arabtec has now lost month two quarters in a row.
Arabtec attributed the loss to the changing landscape of the regions GCC construction market. Commenting on the results, the companys new chairman, Mohamed Thani al-Rumaithi, said: the construction sector in general and Arabtec in particular are affected by low returns from commercial positions accrued on its projects with developers, which has prompted us to adopt a more conservative policy in announcing our projects profits and issuing our financial results.
The company has seen several leadership changes in the past year. Al-Rumaithi was elected chairman earlier this month, taking over from Khadem al-Qubaisi, who was not included in the list of board nominees released on 15 April. The companys founder Riad Kamal was also left off the list. Al-Rumaithi is also chairman of local Unilever arm Thani Murshid Unilever, National Marine Dredging and Abu Dhabi Chamber of Commerce & Industry.
In late March, Arabtec Construction changed CEO, appointing Raja Ghanma into the position. Ghanma previously served as the firms chief operating officer (COO) and has been with Arabtec since 1995.
The CEO position has changed several times in recent years. On 18 June 2014, Hasan Abdullah Ismaik resigned as CEO when Arabtecs share price fell from a high of AED9.9 ($2.7) on 7 May to close at AED4.4 on 17 June. Ismaik had been driving an ambitious strategy to turn Arabtec into one of the 10 largest construction companies in the world by 2018.
Since Ismaiks departure much of this strategy appears to have been abandoned. The company has retrenched senior executives and a limited number of staff to boost productivity and reduce costs after it posted a loss of AED94.4m ($25.7m) in the fourth quarter of 2014.
Arabtecs poor performance has also come at a time where the GCC construction sector is facing troubling times, with increasing costs, ailing confidence due to falling oil prices and low contract awards.
The first four months of this year saw the second-lowest level of contract awards in the Middle Easts construction sector since 2008, as the impact of low oil prices is felt in the industry. While work under way or where financing was in place has largely continued unaffected this year, the region is experiencing a fall in new contract awards.
This impact is expected to continue throughout the year. Contract awards for work either directly or indirectly associated with the Expo 2020 in Dubai or the 2022 Fifa World Cup in Qatar are expected to still happen. But awards for projects that are not considered strategically important could slow down or stop.
|Arabtec projects in Middle East|
|Project||Country||Contract value ($m)||Main contractors|
|Bahrain Bay HQ||Bahrain||60||Arabtec Construction|
|St Regis Amman||Jordan||197||Arabtec Construction|
|Bab Bahr and Manara||Jordan||80||CCC / Drake & Scull / Arabtec|
|Westin Aqaba||Jordan||110||CCC / Drake & Scull / Arabtec|
|Red Sea Astrarium||Jordan||1,550||Arabtec Construction|
|Jumeirah Al-Qalaa and Qasr al-Aqaba||Jordan||350||CCC / Drake & Scull / Arabtec|
|Sabah al-Salem University||Kuwait||429||Arabtec / Combined Group|
|Twin Towers Doha||Qatar||190||Arabtec Construction|
|Msheireb Phase 2||Qatar||631||Arabtec Construction|
|Msheireb Phase 2 Boutique Hotel||Qatar||70||Arabtec Construction|
|Al-Waab City Phase 3||Qatar||50||Arabtec Construction|
|Al-Waab City Phase 4||Qatar||50||Arabtec Construction|
|380 Aramco Villas||Saudi Arabia||283||Arabtec Construction|
|Al-Ain Hospital||UAE||1,170||Arabtec / San Jose|
|Fairmont Hotel Abu Dhabi||UAE||270||Arabtec Construction|
|Midfield Terminal Building||UAE||2,960||Arabtec / TAV/CCC|
|Louvre- Abu Dhabi||UAE||653||Arabtec / San Jose / Oger|
|Maysan Towers||UAE||120||Arabtec Construction|
|Reem Island Mosque||UAE||8||Arabtec Construction|
|Najmat Abu Dhabi||UAE||81||Arabtec Construction|
|Views Saraya||UAE||170||Arabtec Construction|
|Dubai International airport Terminal 2||UAE||153||Arabtec Construction|
|Palazzo Versace Hotel||UAE||626||Arabtec Construction|
|Sanctuary Falls||UAE||112||Arabtec Construction|
|Damac Heights||UAE||150||Arabtec Construction|
|P-17 Tower||UAE||193||Arabtec Construction|
|Barsha Drainage||UAE||15||Arabtec Construction|
|Lillian Tower||UAE||221||Arabtec Construction|
|Palma Villas||UAE||46||Arabtec Construction|
|Tiara Hotel||UAE||53||Arabtec Construction|
|Mira Community||UAE||338||Arabtec Construction|
|Source: MEED Projects|