Arabtec CEO resigns as Q1 net income declines
Dubai-based contractor attributes fall in earnings to pressure on margins and less new contracts
Arabtec Holding, a Dubai-listed contractor, reported a 50 per cent slide in its first-quarter net profit due to a slowdown in awards of new contracts. The company board also accepted the resignation of the group chief executive.
Net profit for the first three months of the year dropped to Dh31.8 million, the company said on Wednesday in a statement to the Dubai Financial Market, where its shares trade. Revenue for the period dipped 16 per cent to Dh2 billion for the reporting period from Dh2.4bn a year-earlier.
This is the first quarterly loss for the company, which has reported profit increases in the past eight quarters. Arabtec, which is realigning its business priorities and exiting non-core assets, said its board has accepted the resignation of chief executive Hamish Tyrwhitt and named Peter Pollard as acting group chief.
The company, which reported a project backlog of Dh14.8bn as of March 31, said the group experienced a “contraction in margins year-on-year, attributable to lower revenue from a slowdown in awards in the construction sector coupled with a number of legacy projects closing out in the coming months”.
The company also recognised a Dh7.8m loss on the group’s investment in contracting firm Depa following the release of Depa's financial statements for the year ended December 31, 2018, it added.
“We remain confident that, with the strong pipeline of opportunities across our addressable markets, we will see more awards in the coming quarters across the construction and industrial sectors,” Mr Pollard, said. “We continue to focus selectively on countries that offer a strong, sustainable pipeline of construction, infrastructure and industrial opportunities including the United Arab Emirates, Saudi Arabia, Bahrain, Kuwait and Egypt.”
The company, in line with the group’s priority to strengthen the balance sheet, reduced debt by Dh249m in the first three months of the year. Arabtec is progressing with the refinancing of its term debt, which will provide a sustainable platform aligned with the company’s requirements, it added.
Updated: May 15, 2019 12:10 PM