Arabtec Holding, Dubai's largest listed construction firm, has registered a third-quarter loss of Dh437.4 million ($119.1 million) owing to the continued decline of the real estate and construction sector.
The Dubai contractor's net loss for the nine months hit Dh380 million, mainly because of the weak performance of Arabtec Construction (one of the group’s subsidiaries) and mainly due to delays in handing over legacy projects.
The key challenges for Arabtec during the period have been project funding, regional geopolitical factors and tight liquidity in the construction sector, said the company in its filing to the Dubai Financial Market (DFM).
On the positive side, the Group’s other subsidiaries continued to be profitable. The Group’s industrial business, specifically oil and gas, has increased its backlog, reflecting the strong pipeline of opportunities, it stated .
Total revenue for the nine month period declined by 18.5% to Dh5.8 billion, impacted primarily by a decline in construction business revenue of 15.6% to Dh4.3 billion, stated the company in its filing to the Dubai bourse.
This drop is reflective of weakness in the UAE construction sector, resulting in a reduction of construction contract awards.
The Group’s backlog remained healthy at Dh13.5 billion despite the decline in new awards during the first nine months of 2019.
In line with the Group’s strategic priority to strengthen the balance sheet, total debt was reduced by Dh341 million in nine months of 2019.
The Group continues to rightsize its workforce reducing manpower and support functions in line with the operational requirements of the business reducing cost and improving productivity and efficiency for the Group.
Group CEO Peter Pollard said: "We are disappointed with the Arabtec group's performance during the third quarter 2019. As previously stated, the board and management remain fully committed to handing over legacy projects."
Many of these projects are in final testing and commissioning stage now and we expect most will be progressively handed over by mid-2020 reducing future risk to the Group, stated Pollard.
"Additionally, we have focused on stabilising the construction business by reorganising the management team, cost optimisation, rationalising our workforce, enhancing corporate governance, implementing initiatives to strengthen the balance sheet and diversifying our backlog towards industrial and infrastructure projects," he added.-TradeArabia News Service
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