Arabtec first-quarter profits up 121% to Dh138 million

Arabtec also reported that it was awarded Dh26.2 billion worth of contracts in the first quarter of 2014, an increase of 28 per cent over the Dh20.4bn a year earlier.

Arabtec said that the total value of its projects at the end of March stood at Dh215 billion. Silvia Razgova / The National

First-quarter profits at Arabtec were up 121 per cent on the same period the previous year as the UAE’s largest listed contractor reiterated its ambition to become one of the world’s top 10 biggest builders over the next four years.

Net profits rose to Dh138 million from Dh62.5m, Arabtec reported at its board of directors meeting yesterday on the back of a 39 per cent increase in revenues to Dh2.15 billion, compared with Dh1.54bn in the first quarter of 2013.

“We are planning a series of acquisitions and mergers in the forthcoming period,” said Hasan Ismaik, the managing director. “We are targeting global players in such high margin sectors as oil and gas, power plants, infrastructure and facility management of huge industrial plants.

"In four years' time, Arabtec will grow from a medium-scale regional player into a global leader in specialised segments of the construction industry. The planned acquisitions and mergers will lead to significant synergies, in terms of accumulated experience, enhanced cash flow and stronger brand," he added.

The company, in which the Abu Dhabi investment fund Aabar bought a 21.6 per cent stake two years ago, has evolved from being a Dubai-focused company to one that is being increasingly associated with Abu Dhabi, amassing a sizeable backlog from government contract wins in the capital.

Arabtec reported that it was awarded Dh26.2bn worth of contracts in the first quarter of 2014, an increase of 28 per cent over the Dh20.4bn a year earlier.

The company said that the total value of its projects at the end of March stood at Dh215bn, including Dh26.2bn worth of projects currently in progress.

New projects signed in the first quarter included a Dh22bn contract with Arabtec to build 36 towers in Abu Dhabi and Dubai in February. The company also won high-profile projects in Egypt, Jordan and Abu Dhabi over the period.

The company said that its gross profit margin grew from 12 to 15 per cent during the period, while the net profit margin increased to 7 per cent, from the 6 per cent reported in the first quarter of 2013.

The Arabtec board also endorsed a decision made at last week’s annual general meeting to cancel a 10 per cent cash dividend in exchange for a 40 per cent bonus share dividend and no cash aimed at building the company’s war chest.

The results were announced after markets closed yesterday. Arabtec shares receded 2.47 per cent in trading during the day to close at Dh9.49.

“Arabtec is in the right sector in the right country,” said Sebastien Henin, the head of asset management at The National Investor. “We seem to be seeing some of these positive announcements which have been made over the last 18 months finally translating into the figures.”

Arabtec raised Dh2.4bn last June in a rights issue that it said would be mostly used to expand its affordable housing and oil and gas operations, enabling it to diversify from traditional construction activities that were hit hard during Dubai’s property crash.

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