New contracts push Depa back into black

The Dubai-based interiors specialist Depa returned to the black yesterday as the company benefited from an increase in work from Abu Dhabi and Saudi Arabia as well as its luxury yacht business.

In an upbeat interim financial statement published yesterday, Depa reported profits of Dh33 million, compared to a Dh110m loss the previous year.

Sales at the company grew 22 per cent to cross the billion-dirham mark for just the second time in the company's history to stand at Dh1.01bn compared with the first half of 2012 of Dh825m.

The increase was driven by a 159 per cent growth in revenues from Depa's Abu Dhabi operation which grew from Dh39m during the first half of 2012 to reach Dh101m during the first six months of this year.

Depa said it had signed more than Dh1.3bn of new contracts during the first six months of the year - up from Dh940m in the corresponding half year in 2012 - including a Dh287m project in Abu Dhabi.

Last November a 24 per cent stake in Depa was acquired by the Dubai-listed contractor Arabtec, a company which is itself 21 per cent owned by the Abu Dhabi government fund Aabar, in a move that analysts at the time said would be likely to increase Depa's Abu Dhabi workload.

"These interim results are indicative of the strong performance and successful turnaround we have achieved. Our H1 [first half] 2013 revenues are above the Dh1bn mark for only the second time in our history, we have posted a solid net profit and our backlog numbers remain strong," Mohannad Sweid, the Depa chief executive, told investors.

"We committed to restructuring our operations during the downturn to position the business for the overall economic recovery. We did this by focusing on diversifying our geographical reach and increasing the flow of business in our core markets while streamlining our management and processes."

Depa said that projects in Saudi Arabia currently account for Dh816m of the company's projects and form 27 per cent of the firm's Dh3bn order book - an increase from the 14 per cent reported the same time last year.

"Depa is clearly benefiting from its relationship with Arabtec and the synergies which that brings as well as from its presence in Saudi Arabia," said Sebastien Henin, frontier markets portfolio manager at The National Investor.

"After a very poor performance last year the company had to deliver and it has."