Arabtec missed analysts’ second quarter profit estimates, despite seeing a profit increase of 11 per cent against the previous year.
The company earned profits of Dh103m in the three months from April to June, as compared to second-quarter profits of Dh92m in 2013.
Analysts on Bloomberg expected profits of Dh134 million from the construction company, while analysts polled by Reuters forecast profits of Dh111 million. Arabtec’s results fell short of both of these.
The company’s share price dipped 6.25 per cent from its close of Dh4 to Dh3.75 in intraday trading, before rising to Dh4.17 at 12.15 am – a gain of 4.25 per cent.
First half profits totalled Dh240 million, up 55 per cent against first-half profits of Dh155m last year.
The company experienced significant boosts to its revenue compared to the previous year, with first-half revenues growing to Dh4.56 billion, compared to Dh3.14bn earned last year – a gain of 45 per cent.
Most of this was driven by revenue increases in the second quarter, up 51 per cent to Dh2.41 billion from Dh1.59bn.
The company said: “all decisions taken by [Arabtec’s leadership] aim at achieving the shareholders and investors’ interests, elevating the company’s position, increasing the revenues and achieving potential growth in future.”
The positive results will provide a much-needed fillip to the company’s fortunes, after it suffered a plunge in its share price following the resignation of its chief executive, Hasan Ismaik, on June 17.
Mr Ismaik resigned shortly after it became public knowledge that he had increased his stake in the company to 28.85 per cent, making him Arabtec’s largest shareholder. His departure was followed by reports, later confirmed by Arabtec, of a series of executive-level firings.
After hitting an all-time high of Dh 7.40 a share on May 14, Arabtec’s share price fell to Dh2.61 on June 30.
Trading in the company’s shares was suspended on July 17 after Bloomberg News reported that Aabar Investments, the Abu Dhabi-backed investment company with a major stake in Arabtec, was in talks with Mr Ismaik over buying his stake in the builder.
Aabar released a non-committal statement on the Dubai Financial Market last week, in which it said only that it was considering its options. This failed to reassure investors and analysts.
Arabtec’s share price has since partially recovered to Dh4 per share as of Thursday.
Under Mr Ismaik, Arabtec set out on an ambitious plan to become one of the world’s top 10 construction companies.
By bidding aggressively for construction projects, the company amassed a backlog of more than US$50bn of orders during Mr Ismaik’s tenure. This included a $40bn flagship project to build one million homes for low-income families in Egypt as political ties grow between the UAE and the government of Abdel Fattah El Sisi.
Despite market speculation, it is not known how or whether Aabar or Mr Ismaik will change their holdings in the company over the next few months.
Mr Ismaik sold approximately $4 million of his shares on July 23. He retains a holding valued at approximately $1.4bn.
Aabar, which owns 18.94 per cent of Arabtec, is the company’s second-largest shareholder. Aabar is owned by International Petroleum Investment Corporation, an Abu Dhabi sovereign wealth fund that manages $65.3 billion in assets, according to the Sovereign Wealth Fund Institute.
abouyamourn@thenational.ae
abouyamourn@thenatioanl.ae
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