Dubai's Arabtec reports first profit since 2014 after restructuring
Arabtec posted its first quarterly since 2014 as the contractor’s new management press ahead with a high stakes turnaround plan.
The Burj Khalifa builder said net profit for the first three months of 2017 stood at Dh18 million – the company’s first quarterly profit since the third quarter of 2014. It reported a net loss of Dh46m for the quarter of 2016.
Arabtec said that revenue for the quarter was Dh2.2 billion, up 11 per cent compared to the Dh2bn it generated during the same period last year.
The company said that its gross margin also increased to 4 per cent versus 2 per cent during the same period in 2016.
“While this is another step towards the turnaround of the group, there is still a lot more work to be done,” said group chief executive, Hamish Tyrwhitt. “This initial step reinforces our commitment to returning Arabtec to profitability and solidifies our strategic roadmap to achieving sustainability.”
The news comes less than a month before Arabtec is due to hold a rights issue. The company is looking to raise Dh1.5 billion by issuing the same number of new shares which will be effectively underwritten by company’s biggest shareholder, Aabar Investments, which currently owns a 36.11 per cent stake in the firm.
The rights issue is the first step in the new management’s three year turnaround plan in which it aims to clean up its balance sheet.
Under the plan, which Arabtec unveiled in March, the company aims to stabilise the business through the capital raising in 2017 and rid itself of accumulated losses of Dh4.6bn.
Then in 2018, Arabtec said that it plans to prepare for the future by keeping costs in check and growing its backlog of projects to Dh8-9 billion. And in 2019, the company said it plans to focus on growing profit margins and cash generation.
Last month Arabtec said that the company’s liabilities exceeded its total assets by Dh250.7m.
Arabtec’s shares rose 0.49 per cent in early trading to stand at 82 fils by 11.30am.