Depa, the interior contracting company, posted a Dh198.2 million (US$53.96m) loss last year, which it called "the most difficult year in the company's history".
The majority of those losses came from writing down the value of a contract to construct the interiors of the Burj Khalifa, the tallest building in the world. Depa is involved in a dispute over variations made to the order and delays, but it did not identify the company with which it was in negotiations. An executive said last year it was not Emaar Properties, the developer of the tower.
Depa was also hit hard by the slowdown in UAE projects. Revenues fell by 32.5 per cent to Dh1.8 billion for the year, compared with 2009. Depa said "this was primarily due to the severe drop in construction-related activities in the UAE and some other countries across the region". Contract profit margins declined to 6.3 per cent from 16 per cent in 2009.
Abdullah al Mazroui, the chairman of Depa, said the company's profit cycle lagged behind others in the property sector, but it would enjoy growth in the years to come.
"As the company operates in the last leg of the construction cycle, it lags the peaks and troughs of other contractors by an average of 18 months, resulting in 2010 being Depa's 'recession year'," Mr al Mazroui said.
The company expanded into Malaysia, Azerbaijan, Thailand, Syria and Yemen last year to diversify its income sources.
Depa also acquired two companies as part of its expansion plans: the Dubai stone producer Carrara and the Singapore furniture maker Design Studio. The latter is Depa's main entry into the booming Chinese market, Depa said in its annual report. Design Studio had already started construction on a factory in Guangzhou.
Depa was recently upgraded by Alembic HC Securities, in part because of its ability to diversify its project portfolio. While it increased revenues from abroad, 60.9 per cent still came from the UAE. Depa predicted a growth in the regional market, particularly in Qatar, where preparations for the 2022 Fifa World Cup will soon begin in earnest.
It won major contracts in the region last year, such as a Dh72m deal in Syria for furnishing the Yasmeen Rotana Hotel in Damascus. The company also won a Dh104m deal to work on the International Petroleum Investment Company headquarters in Abu Dhabi.
Depa said it had spent last year restructuring the company, which involved creating four "operational" chief executives, who each took control of a region and some of the business lines of the company. Its shares were unchanged in trading yesterday, closing at $0.648. They were down 7.43 per cent for the year.
Depa describes itself as the "world's largest interior contractor". It specialises in fitting out luxury hotels, yachts and apartments.