Continued project delays and restructuring activities in Bahrain and Kuwait bit into profits for the Middle Eastern division of UK engineering and design firm Atkins.
Project delays bite into Atkins profit, but UAE shows promise
Continued project delays and restructuring activities in Bahrain and Kuwait has bit into profits for the Middle East division of the engineering and design firm Atkins.
Operating profits for the division fell 17.6 per cent to £4.2 million (Dh24.6m) during the six months to September, the company said yesterday, despite an increase in development activity in the UAE, Qatar and Saudi Arabia.
Atkins said the slump in profits came despite a 3.5 per cent increase in revenues to £82.6m as cash flow in the region improved.
But margins in the region slumped from 6.4 per cent last year to just 5.1 per cent and staff numbers in the division also fell by 3.7 per cent to 1,971 during the period.
“The business has made very encouraging progress in the Middle East focused on the Kingdom of Saudi Arabia, Qatar and the UAE,” said Uwe Krueger, the Atkins chief executive. “Don’t read too much into the results at this point in time. On average the business in the Middle East is a 10 per cent margin business. In the Middle East you always have to look at the profit margin over a longer period of time – perhaps two to three years.”
The company announced in October that it had been appointed to design Al Habtoor’s Dh11 billion residential and hospitality project – Al Habtoor City – on Sheikh Zayed Road in Dubai. It is also designing Emaar’s Opera House in Downtown Dubai.
In Abu Dhabi, Atkins said it had been appointed by Musanada to work on the development of four new schools in the capital and Al Ain under the Government’s Future Schools programme. And in Ras Al Khaimah it was working on a Hilton project.
Last month, Atkins announced it had acquired the Singapore-based project management business Confluence. The company said the move would add about 70 Abu Dhabi-based staff to its Middle East business.
Atkins said much of its business over the period came from railway contracts in the region. The company recently won a contract to design the Doha Metro Red Line South as part of a consortium with Qatari Diar and Vinci. It was also working on designs for the Riyadh Metro as part of a joint venture with Typsa.
Dr Krueger said Atkins was looking to work on the proposed Dh7bn Abu Dhabi Metro and light rail scheme, which is expected to start tendering construction contracts in March.
Atkins said global pre-tax profits grew 14 per cent to £54.8m and revenues increased 12.2 per cent to £915.4m as the group benefited from a strong performance from its UK, Asia-Pacific and energy divisions.