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Abu Dhabi, UAEThursday 13 December 2018

Arabtec posts third quarter profit as company turns corner following 2016 losses

Dubai-based company says net profit rises Dh18 million in three months ended September

Arabtec had a backlog of Dh16.1bn at the end of June this year. Silvia Razgova / The National
Arabtec had a backlog of Dh16.1bn at the end of June this year. Silvia Razgova / The National

Arabtec Holding, the UAE's biggest listed construction company, posted a third quarter net profit, the third consecutive positive result, as the Dubai-based construction turns a corner following losses last year amid a regional slowdown in infrastructure projects.

Net profit attributable to equity holders rose to Dh18m in the three months ended September 30 compared to a loss of Dh226m in the same period last year. Revenue rose 5.4 per cent to Dh2.1 billion in the third quarter compared to Dh1.98bn in the corresponding period last year.

"We have now delivered our third consecutive quarter of profitability, supported by new project wins across our operating companies," said Hamish Tyrwhitt, Arabtec's chief executive officer.

"The group remains on track to achieving the first phase of its strategic road map to stabilize the business in 2017, ensuring long-term, profitable and sustainable growth."

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The company said it was assessing further divestments and options to increase efficiency and productivity through the integration of operating companies. During the third quarter, Arabtec sold its 14.6 per cent stake in Jordan Wood Industries, a listed Jordanian company that manufactures office and household furniture.

"The results were mixed. What I liked was that they were able to expand the gross profit margin, which is positive, it went up to 5.5 per cent from 5.1 per cent earlier. What disappointed was the fact that results from associates came in lower," said Sanyalak Manibhandu, the head of research at NBAD Securities. “Their (profit) was lower because of lower share of profit from joint ventures and lower because expenses went up when ideally we were expecting them to come down a little bit.”

Mr Tyrwhitt said he was "pleased with the progress made so far this year to stabilize the business," and that he looked "forward to making further progress in the fourth quarter on divestments and closer integration of our operating companies alongside strengthening our risk management processes."