Gulf Construction Online - Arabtec posts $119m net loss; revenue down 18pc

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The Amaranta project in Villanova, Dubai, was awarded to Arabtec Construction last May.

Arabtec posts $119m net loss; revenue down 18pc

01 December 2019

Arabtec Holding, Dubai’s largest listed construction firm, has registered a third-quarter loss of Dh437.4 million ($119.1 million).

The Dubai contractor’s net loss for the first nine months of the year hit Dh380 million, mainly because of the weak performance of Arabtec Construction (one of the group’s subsidiaries) and mainly due to delays in handing over legacy projects.

The key challenges for Arabtec during the period have been project funding, regional geopolitical factors and tight liquidity in the construction sector, says the company in its filing to the Dubai Financial Market.

On the positive side, the group’s other subsidiaries continued to be profitable. The group’s industrial business, specifically oil and gas, has increased its backlog, reflecting the strong pipeline of opportunities, it states.

Total revenue for the nine-month period declined by 18.5 per cent to Dh5.8 billion, impacted primarily by a drop in construction business revenue of 15.6 per cent to Dh4.3 billion, states the company.

This drop is reflective of weakness in the UAE construction sector, resulting in a reduction of construction contract awards. The group’s backlog remained healthy at Dh13.5 billion despite the decrease in new awards during the first nine months of 2019.

In line with the group’s strategic priority to strengthen the balance sheet, total debt was reduced by Dh341 million in the nine months of 2019. The group continues to right-size its workforce reducing manpower and support functions in line with the operational requirements of the business reducing cost and improving productivity and efficiency for the group.

Group CEO Peter Pollard says: “We are disappointed with the Arabtec group’s performance during the third quarter 2019. As previously stated, the board and management remain fully committed to handing over legacy projects.”

Many of these projects are in final testing and commissioning stage now and Arabtec expects most will be progressively handed over by mid-2020 reducing future risk to the group, states Pollard.

“Additionally, we have focused on stabilising the construction business by reorganising the management team, cost optimisation, rationalising our workforce, enhancing corporate governance, implementing initiatives to strengthen the balance sheet and diversifying our backlog towards industrial and infrastructure projects,” he adds.