The construction sector has been one of the biggest casualties of the property downturn, and the industry's suppliers are also feeling the impact. Arkan Building Materials is one company with direct exposure to the sector that is struggling to find business.
Arkan's stock price has fallen 18 per cent since the start of the year, the greatest decline among stocks in its sector. Its trading volume is also down, says Wadah Al Taha, the chief investment officer at Al Zarooni Group in Dubai.
Arkan operates through its wholly-owned subsidiaries Emirates Cement Factory in Al Ain and Emirates Block Factory in Mafraq. Arkan's subsidiaries can produce 850,000 tonnes of clinker and 1.2 million tonnes of cement and concrete blocks annually.
The construction slowdown caused the company to report a net income of Dh2.7 million for the third quarter compared with Dh15.9m for the same period in 2010. Mr Al Taha expects the company's fourth-quarter results to be in line with the third quarter, at best.
Arkan's expansion plans, which were mapped out in the peak of the property boom, include the addition of dry mortar, a substance used to join bricks, and a lime plant.
Arkan's US$100m dry-mortar plant will have a production capacity of 1,000 tonnes per day and is expected to be fully operational in the second quarter of next year. Dry mortar is made from a combination of sand, limestone, cement and hydrated lime. The 57,000-square-metre facility is in Mafraq, a district on the outskirts of Abu Dhabi.
Arkan's lime plant, with a design capacity of 900 tonnes per day, is also expected to come online in the second quarter of next year. The facility is to be located in Al Ain Industrial Park.
"Looking a few years back when equity, commodity, construction and real estate market were booming, the plans of increasing capacity looked quite viable," Mr Taha said.
twitter: Follow our breaking business news and retweet to your followers. Follow us
