Dubai's Arabtec posts eighth quarterly profit as Q4 income jumps 58.6 per cent
The contractor also more than doubled its full-year 2018 profit beating analysts' estimates
Arabtec Holding, the Dubai-listed contractor, said its fourth quarter net profit surged 58.6 per cent on the back of project wins and debt reduction.
Net profit attributable to equity holders rose to Dh76 million, the company said on Wednesday in a statement to the Dubai Financial Market, where its shares are traded. Revenue for the period however, fell 3.4 per cent year-on-year to Dh2.7 billion.
The contractor, which is realigning its business priorities and exiting non-core assets, said its full-year 2018 net profit more than doubled to Dh256m, from Dh123m at the end of 2017, beating the estimate of analysts polled by Bloomberg. Revenues for the 12-month period rose to Dh9.9bn, a 7.8 per cent year-on-year jump.
“The group has now achieved eight consecutive quarters of profitability supported by positive cash from operating activities and a reduction in net debt,” said Arabtec group chief executive Hamish Tyrwhitt. “Operational productivity and efficiency remained a strategic objective and will be a key driver in positioning Arabtec as a competitive and sustainable business. We continue to simplify the business.”
The company's share jumped as much as 3.5 per cent in the morning trading session.
In the fourth quarter, the debtor days were reduced by a further 11 days to 155 days, contributing to a positive net cash from operating activities to Dh924m. The increase in operating cash reflects the group’s ongoing focus on "shortening payment cycles and cash collection from legacy projects", the company said.
"Arabtec is progressing its refinancing of the group’s existing term debt which will provide a sustainable platform for the future," it said in the bourse filing.
Arabtec has hired New York investment bank Moellis & Co to assist the company in a debt refinancing plan. Like other contractors, Arabtec suffered from a three-year slump in oil prices that muted economic conditions and caused construction activity to dip. However, relatively higher oil prices are prompting a rise in building, which is boosting performance.
Arabtec expects to grow its profit again in 2019, as it completes its debt refinancing and weighs divestment of non-core assets including a stake in interiors company Depa, Mr Tyrwhitt said in November.
“All the characteristics that drove our quarter-on-quarter profit growth [this year] continue to be there, and we’ve not reached the point where we’ve created the sustainable model we’d like, so given everything we’re doing, you’d expect continued growth,” he told The National at the time.
On Wednesday, the company reported a backlog of Dh15.6bn at the end of last year, including significant project awards from Adnoc to a consortium that includes Arabtec and a Dh155m contract from Dubai Municipality for sewerage and drainage infrastructure works.
Going forward, Arabtec will continue to take a selective approach to new work, particularly in the building sector. The group will strengthen its regional footprint taking advantage of the growing market opportunities in the UAE, Saudi Arabia, Egypt, Bahrain and Kuwait, further diversifying its project portfolio, the company said.
Updated: February 13, 2019 12:36 PM