Depa reported an 18 per cent decline in first-half profits as the Dubai interiors company faced increasing competition from regional rivals.
The results failed to stir any trade in the stock despite the Dubai regulator allowing trading to resume after suspending the buying and selling of the Nasdaq Dubai-listed company last week.
That was triggered by concerns over the composition of its board of directors – half of whom came from Arabtec.
Depa, which is 24 per cent owned by the Dubai construction company Arabtec, said that profits fell to to Dh27 million owing to increased competition in the Middle East as well as the company closing unprofitable operations in locations such as Azerbaijan, India, Jordan and the UK.
Revenues also fell 9 per cent over the same period to Dh920m compared with Dh1.01 billion a year ago the company said.
Last week the regulator said that Depa had breached market rules – thought to be related to the company’s failure to appoint a new chairman.
The departure of Mr Ismaik from Arabtec in June came as a shock to the market, sending Arabtec shares plummeting and leaving investors guessing as to the company's strategy. Arabtec is 27.9 per cent owned by Mr Ismaik and 18.9 per cent owned by Abu Dhabi-based Aabar.
The resumption of Depa share trading came after Depa appointed El Sayed Zakaria Mohamed Ibrahim, the managing partner of Abu Dhabi-based Architecture & Planning Group and chairman of Zaytoon Investments, as a new interim board director.
In a statement Depa said that “a permanent arrangement would be discussed and determined during the board’s next formal meeting”.
However, the appointment and publication of results did little to alleviate the concerns of some analysts.
Both NBK Capital and Arqaam Capital have suspended their coverage of the company.
“The company itself is solid. The problem with Depa is that they still don’t have a full-time CEO or a clearly communicated strategy,” said Loic Pelichet, assistant vice president for research at NBK Capital. “We have suspended our coverage because of this and the fact that, at the moment we just don’t know what Arabtec’s intentions are towards Depa.”
Depa’s interim group chief executive Nadim Akhras said that the company was “approaching the second half of the year with cautious optimism”.
Mr Akhras said: “The GCC construction market has witnessed a significant shift towards lower-margin projects as inexperienced players and new entrants look to gain market share.
“As a result, we continue to be extremely selective in what we bid for and how projects are priced. We are looking at new opportunities in South Asia, Africa and CIS, having signed over Dh579m of new contracts in the first six months of the year.”
lbarnard@thenational.ae
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