Dubai’s Arabtec Holding has reported its first quarterly profit since 2014 on the back of higher revenues.

The contractor’s net income for the three-month period ended on 31 March rose to AED18m ($4.9m), against a net loss of AED46m recorded for the same period in 2016. The company’s gross profit improved by AED52m to AED91m for the first quarter of 2017, while its gross margin increased to 4 per cent for the period against 2 per cent for the first three months of last year, according to an Arabtec statement on the Dubai Financial Market (DFM), where its shares are traded.

Arabtec revenues climbed 11 per cent to AED2.2bn for the first quarter of 2017, from AED2bn reported for a year-earlier period.

“While this is another step towards the turnaround of the [Arabtec] group, there is still a lot more work to be done,” company’s group chief executive, Hamish Tyrwhitt said in the statement, adding that the company’s recapitalisation programme is laying the foundation for a phased recovery.

Arabtec aggressively expanded its operations in the UAE and abroad but ran into financial troubles in 2014 after its chief executive and the senior management departed. It was at the heart of a stock market slump, and subsequently, had to restructure its business to cut costs.

The firm had recorded a net loss of AED3.5bn for the financial year 2016, which widened from AED2.8bn reported at the end of 2015, as impairment losses rose.

“The bulk of the spike in the operating expenses is attributable to AED1.9bn in non-recurring impairment losses on receivables and other items,” the company had said in a statement 22 March statement, adding that the financial performance of the company is “reflective of the adverse market conditions, which have a negative impact on the construction industry across the GCC”.

The company is currently going through a recapitalisation programme, which includes a rights issue of 1.5 billion new shares at AED1 a share.

The rights offering is fully committed by Arabtec’s largest shareholder Aabar Investment and those shareholders who choose not to participate in the issue will be diluted up to 24.53 per cent.

With AED1.5bn in new equity, Arabtec’s paid-up capital will rise from current AED4.6bn to AED6.1bn. The firm subsequently, plans to reduce the capital through pro-rata cancellation of shares to cut the entire accumulated losses on the balance sheet, which at the end of last year stood at estimated AED4.6bn.