Gulf General Investment Company's first-quarter loss narrowed as the investment company based in Dubai restructured its debt and costs fell.
But it is not out of the woods yet.
Shares in the company have been the worst-performing on the Dubai Financial Market this year, declining by almost 40 per cent since the start of the year. Yesterday Gulf General ended 3.6 per cent down to 35.1 fils. The shares have languished in the past year from highs of about Dh5 enjoyed near the end of 2008. It reported a net loss of Dh48.8 million for the first quarter ending on March 31, after a loss of Dh85m a year earlier, the company said in a statement to the Dubai bourse yesterday.
Revenue declined to Dh448m from Dh611.7m in the same period, while the cost of sales dropped to Dh348.4m from Dh568.6m.
Gulf General, which has taken an active interest and invested in property developing and earns about half its operating income from that sector, in March hired HSBC Bank Middle East as an adviser to restructure its debts due to banks. The company said then its board decided to "either exit or close down" five loss-making subsidiaries. In the same month, the company was hit by a downgrade from Moody's ratings agency, prompted by increasing risks associated with its refinancing challenges.
The company's exposure to Dubai's property market has left it with a pile of debt, although it has not disclosed how much has to be restructured. In January, the company said it would delay a US$300m bond issue to be used to trim short-term debt to the end of the first quarter because the cost was too high. Moody's at the time assigned a "B1" rating to the proposed debt issue, with a "negative outlook".
But in March, Moody's downgraded the company to "B2" and placed it "under review", meaning a downgrade was possible within three months. Three days later the company requested that Moody's terminate its coverage.