Depa's diversification strategy away from Dubai succeeds with profits and earnings both forecast to grow by 30 per cent this year, company says.
Metro fit-out firm gains overseas lift
Depa, the interior fit-out contractor involved in the world's tallest tower and Dubai's metro stations, expects double-digit profit growth for at least the next two years, largely because of its strategy to diversify away from Dubai, said Noor Sweid, the company's managing director of strategy.
Projects that Depa has worked on include the Burj Al Arab, Emirates Palace and a number of private superyachts. Last month it was awarded the contract for the Ferrari World Theme park in Abu Dhabi. Despite the recession, Depa has forecast it will see both profit and revenue growth of 30 per cent. Last year, revenues were up 38.9 per cent to Dh1.97 billion (US$536.9 million), with profits up 21.2 per cent at Dh194.5m.
"We have always looked at growing the company sustainably and diversifying our revenues," Ms Sweid said. The company went international in 1999, setting up operations in Egypt, and now operates in 17 countries. Last month it announced its entry into Angola. "Despite the downturn in the global economy, we're finding that the diversification strategy is now really bearing the fruit," Ms Sweid said.
Another factor in the company's growth during the economic downturn is that fitting out the interior of a property is the last stage of a project, Ms Sweid said. One of Depa's most high-profile projects is the Burj Dubai, which is expected to open in December. Ms Sweid said work on the tower's interior was progressing well and she believed the tower would be completed on time. "They've had many bumps along the road, but as long as we're meeting the timeline they expect from us, then we're doing a good job."
As part of its diversification, Depa has started to take on a number of hotel refurbishment and infrastructure projects, which tend to be counter-cyclical. "Governments spend on infrastructure when there's a downturn to keep the economy stimulated, so here in the region billions and billions have been committed to infrastructure," Ms Sweid said. "All the hotels we worked on ten years ago now need to be refurbished."
She said that this covered a number of hotels in Dubai, including the Burj Al Arab, the Jumeirah Beach Hotel and the Fairmont, but contracts had not been agreed. Jumeirah Group said that talk of a refurbishment of the Burj Al Arab is "unsubstantiated". To be able to take on projects such as airports and hospitals, Depa formed a joint venture with the German interior contractor Lindner Group, which specialises in infrastructure projects.
The newly open Dubai metro was one project it has worked on with Lindner. The stations had a theme of earth, fire, air and water for their interior design, she said. "It had its own logistical challenges because each one was slightly different." Last month, Depa cancelled millions of shares listed on the Nasdaq Dubai that it had repurchased, saying its stock was undervalued. The exchange has faced problems with low trading volumes.
Ms Sweid said: "We're looking at switching exchanges." More options for the firm, Ms Sweid said, would be available in March. Among them was a secondary listing which was only a possibility when a company had two financial years of a public listing. Ms Sweid said the company would also consider switching to the Dubai Financial Market or the Abu Dhabi Securities Exchange. Depa's backlog of contracts stood at Dh2.6bn for the first half of the year, it said.