UK builder Kier lands £192m in Abu Dhabi contracts

Kier Group is one of a raft of UK contractors ramping up its operations in the UAE.

The UK-listed contractor Kier Group is one of a raft of UK builders ramping up its operations in the UAE after it won two new joint-venture contracts worth £192 million (Dh1.15 billion) in Abu Dhabi.

Kier said that it had been awarded a £105m joint-venture contract award to build a new hotel and spa in Abu Dhabi.

And at the same time it has won an £87m joint venture with Sheikh Sultan bin Khalifa’s engineering company, Mercury International Electro, to build a new data centre for a UAE bank.

Kier declined to give further details about the contract awards.

The news comes after the Meraas subsidiary Dubai Parks & Resorts, which is building three new theme parks in Dubai’s Jebel Ali, named Kier as one of the team of contractors carrying out the multibillion-dirham project alongside its fellow British contractors Carillion and Laing O’Rourke.

Kier reported that it had been awarded a contract worth £47m to connect the utilities at the three parks.

It also comes as Kier ramps up work on a £26m contract to build the first phase of a new 23,000-square-metre campus for the University of Dubai in Academic City close to Dubai Silicon Oasis.

Work on site at the campus started in May and is expected to take 16 months.

Kier said it expected growth in the number of contracts up for grabs across the country over the coming months.

“It is anticipated that there will be a rising level of opportunities in the UAE supporting growth in our international operations,” said Haydn Murselll, the Kier Group chief executive, in the company’s first-half results statement.

“In Dubai, the real estate, tourism, transportation and infrastructure sectors are all yielding good opportunities as the economy recovers strongly and as the Emirate prepares for Expo 2020. In Abu Dhabi there is also a growing pipeline of good prospects across transportation, tourism, health care, education, industrials, water and defence, as well as a steady stream of opportunities in the oil and gas sector.”

The news came as Kier reported a 40 per cent fall in pre-tax profits to £14.8m after exceptional items, which the group said was because of the impact of taking over its rival contractor May Gurney.

Group revenues increased 51 per cent to £3bn.

Kier is among a number of UK based contracting companies that have again started to grow their presence in the UAE after being hit hard by the global financial crisis.

Last year its rival UK contractor Carillion said it aimed to double its annual revenues from its Middle Eastern business to about £1bn (Dh5.72bn) by next year as the company targets more UAE orders.

Carillion, has also been appointed to work on the Dubai Parks & Resorts Hollywood movie theme park Motiongate, through its UAE joint venture Al Futtaim Carillion.

And in March Dutco Balfour Beatty, the Dubai based joint venture arm of Balfour Beatty, announced that it was scaling up UAE operations after it won a US$381 million contract from Emaar Properties to extend the Dubai Mall.

“The UK construction market is still at a much earlier stage of recovery than we are seeing in the Middle East,” said Andrew Gibb, an analyst at Investec. “Kier is very much looking to expand its international operations at the moment, especially in the Middle East where margins are much higher than domestically.”

“In general we are seeing that UK contractors are getting more comfortable with the risk reward profile offered by work in the Middle East,” he added. “With Expo 2020 and the Qatar World Cup coming up at around the same time then, if the spending plans that everyone is talking about are correct then there will be a significant amount of work available to contractors.”

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