Profits at Arabtec returned into the black in the second quarter it said yesterday as investors watched closely to see whether pledges of a 10 per cent dividend would be met.
Arabtec swings back into the black
Arabtec returned to profit in the second quarter, it said yesterday, as investors watched closely to see whether pledges of a 10 per cent dividend would be met.
Earnings at the UAE's largest construction company rose to Dh92.4 million for the three months to the end of June compared with a loss of Dh11.6m for the same period the previous year driven by a strong performance in its Saudi Arabian and UAE operations. Arabtec, which announced in June that it would pay a 10 per cent dividend to investors in the coming financial year, said that revenues for the second quarter grew 23 per cent to Dh 1.6 billion from Dh1.3bn last year.
The company, in which the Abu Dhabi Government's investment company Aabar Investments owns a 21 per cent stake, reported that profits for the first six months were 113.6 per cent higher than a year earlier, rising to Dh154.9m from Dh72.5m in the same period last year.
Revenues for the first half of the year were up 19 per cent to Dh3.1bn from Dh2.6bn a year earlier. "Our results are a clear indicator of the health of the industry and the potential for sustained growth in the medium term," said Hasan Ismaik, Arabtec's managing director and chief executive.
"All these positive developments are precursors to a strong performance in 2013 and beyond, which will start to show enhanced returns from 2014 onward since profits are tied to progress of work," he added.
"Our focus now is on refining our project management organisation and execution platform."
The company, which is building the Louvre Abu Dhabi, said it grew its backlog of work by Dh7.3bn to Dh24.4 billion.
"We expect that this substantial backlog will have significant positive impact on the company's financial position and profitability during the next five-year period as well as in the long term," Mr Ismaik said.
But for analysts watching the company's performance closely to see whether the pledge of a 10 per cent dividend would be met, the results left room for improvement.
"These results show that the company has performed better in the second quarter of the year than the first," said Mohammed Ali Yasin, the managing director of National Bank of Abu Dhabi's brokerage arm.
"In order to be able to pay out a 10 per cent dividend we believe the company needs to make a net profit of between Dh550m and Dh600m for the year so the third quarter results are now essential in getting towards that goal."
Last month, Arabtec completed a Dh2.4bn rights issue as part of a wider capital-raising for Arabtec, which aims to raise a total of up to Dh4.7bn over the next five years aimed at growing and diversifying the business away from the UAE's cyclical property sector.
If needed, a second rights issue for a further Dh2.4bnis planned for early next year. The company is also considering a Dh1.6bn non-convertible bond issue that could take place over the coming year.
In its statement to the Dubai bourse yesterday, Arabtec said that it was still in "amicable discussions" with the private developer Meydan over a long-running legal dispute involving construction work on the Meydan racecourse in Dubai.
Arabtec, which last year bought a 24 per cent stake in the listed interiors contractor Depa also said that it was confident that its Dh220m share in the company had not been impaired by Depa's involvement in a US$600m legal row over its work on a new airport in Qatar.
"Based on legal advice, the group and its associate remain confident that such a possible claim will have no grounds for jurisdiction," Arabtec said.
Also yesterday, the Abu Dhabi-listed Eshraq Properties reported that it had returned to profit, reporting second quarter earnings of Dh24.9m compared with a loss of Dh2.8m the previous year.
The company sold Dh54.8m worth of land during the three months to the end of June compared with Dh1.1m during the same period last year.