Depa, the Dubai interior contractor that worked on the Burj Khalifa and Dubai Metro stations, has warned that this year will be "tough", with no growth in profit.
Depa scales back this year's profit forecast
Depa, the Dubai interior contractor that worked on the Burj Khalifa and Dubai Metro stations, has warned that this year will be "tough", with no growth in profit. The caution came as a surprise because Depa had previously said it expected some growth for the year.
The company, which is due to publish its audited results on March 29, said last year's performance was in line with market expectations, with revenue growing about 36 per cent to Dh2.7 billion (US$736 million) from Dh1.97bn in 2008. Net profit increased 24 per cent to Dh241m. Depa's past projects include the Burj Al Arab in Dubai, Emirates Palace in Abu Dhabi and several private superyachts. "2009 was an extremely challenging and difficult year worldwide," said Mohannad Sweid, the chief executive of Depa. "Despite this, we have managed to maintain our strong performance, as we anticipated the downturn ahead of time and prepared well for it by managing our cost base efficiently and diversifying our revenues geographically and by sector."
As part of its diversification away from the hospitality sector, which has suffered, Depa is taking on more infrastructure projects, which tend to be counter-cyclical in a downturn as governments keep spending to stimulate economic activity. Depa also won contracts in Angola and Jordan last year. "Although we are seeing signs of recovery, we believe that 2010 will also be extremely tough, and we are further streamlining our business to strengthen our ability to cope with difficult market conditions and further diversifying our revenue base as we have been doing over the last decade," Mr Sweid said.
Depa said that as Abu Dhabi's hospitality sector continued its rapid growth, income from the sector continued to grow as a proportion of the company's overall revenue. Depa fitted out five of the hotels on Yas Island and is also working on the Ferrari World theme park, which is due to open on the island this year. Despite Depa's diversification, there is still business for the company in Dubai's hospitality sector. Last year, it won contracts to fit out the Royal Mirage and Conrad hotels.
Depa has strengthened its operations in Saudi Arabia and Qatar in anticipation of strong growth in those markets. In December, the company won a Dh67m refurbishment contract for three hospitals in Doha. Also in December, Depa's joint venture, Lindner Depa Interiors, was awarded a second Dubai Metro contract worth Dh245m to fit out 11 Green Line stations. Depa's contract backlog was Dh2.1bn on December 31 compared with Dh2.7bn a year earlier. The portfolio comprises more than 100 projects.