Dubai-listed Arabtec Holding said it swung to its first full-year loss since 2016 due to a decline in revenue amid a slowdown in the real estate sector.
Net loss attributable to the owners of the company for the period ending December 31 reached Dh774 million, compared to a profit of Dh256m during the same period in 2018, the company said in a filing to the Dubai Financial Market, where its shares trade. Revenue for the period plunged 21 per cent to Dh7.78 billion.
The company attributed the loss mainly to weaker income from its construction business as liquidity for projects remained tight. A slowdown in the real estate sector that resulted in the awarding of a limited number of contracts, settlements and recovery of claims and losses from an investment in an associate company also dented profitability.
Arabtec's industrial, infrastructure and mechanical, electrical and plumbing business lines, however, remained profitable last year, it added.
“The [Arabtec] group continues to right-size 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,” it said on Sunday.
“The group continued to reduce debt in 2019 and is working closely with key lenders to align its debt with its business needs.”
In a separate statement, the company said that its group chief financial officer Adel Al Wahedi has also resigned, without giving a reason for his departure.
Arabtec said it handed over six legacy projects since the third quarter and plans to hand over nine more by the end of 2020.
“This will significantly reduce the group’s risk around costs and will allow Arabtec to fully focus on pursuing its contractual entitlements with clients”, it said.
The contractor is also taking a selective approach to geography, clients and contract terms and said it will focus on its core strengths such as construction of villas to boost growth.
The company is bullish about opportunities in industrial as well as the infrastructure segment. Target Engineering, a subsidiary of Arabtec that operates in the oil and gas sector, is well positioned to grow its revenue and backlog through a strong pipeline of opportunities in the UAE and Saudi Arabia, it said.
The Dubai-listed firm is also focusing on infrastructure development through its subsidiary Arabtec Engineering Services. It looks to take advantage of future growth opportunities in the UAE including roads, bridges, sewerage, water and irrigation works projects.
The company last year said it planned to merge with Abu Dhabi-based Trojan holding. "Discussions and due diligence are ongoing” for its potential deal, it noted on Sunday.
Last year, Arabtec won new contracts, including a Dh366m contract from Emaar Misr to build a residential project in Egypt. Target Engineering also won a Dh280m contract for the expansion and upgrade of a water disposal facility in Saudi Arabia.
Construction companies in the region have faced headwinds as the property market slowed after a three-year oil price drop that began in 2014.