Arabtec shares up 8% in Dubai despite 2015 loss
Investors bet the worst is over as builder reports $626m loss
Arabtec shares on Sunday rallied by more than 8%, as investors bet the worst is over after the builder posted a $626m loss.
The company, which is listed on the Dubai Financial Market, said its revenues fell to AED 7.3 billion last year, down 12% on 2014.
Its unaudited financial results for 2015 also showed a net loss to shareholders of AED 2.3 billion ($626m), compared with a AED 215 million profit in 2014. That equates to a AED 0.51 loss per share, compared to AED 0.05 earnings per share in 2014.
Despite the losses, Arabtec shares soared on Sunday as investors bet that the company can start to recover after two years of massive upheaval, management changes, mass restructuring and an ongoing efficiency drive.
Nabil Farhat, an Abu Dhabi-based partner at Al Fajr Securities, told Bloomberg that investors “are hopeful that the company has finished cleaning up its books” under the new management.
“Retail investors are optimistic about the project pipeline, which is estimated by the company at 19.3 billion dirhams,” he added.
Arabtec has had a series of contract wins recently, notably a joint venture with Turkey’s TAV Construction to build a passenger terminal at Bahrain International Airport. But a massive project worth $40 billion to build homes in Egypt has so far failed to materialise.
Arabtec said the plunge into loss last year was “primarily a consequence of the continuing difficult environment that the regional construction market is facing and the challenging economic backdrop.”
Arabtec plans to continue the restructuring and cost-reduction programme, it said in a statement to the Dubai bourse.
“The company is seeking to reduce its cost base even further in 2016 in addition to the annualised cost savings previously announced,” it said.
“All of the group’s entities are vigorously seeking full recovery of receivables due and where necessary enforcing the group’s rights were payments are not made.”
Saeed Al Mehairbi, acting Chief Executive of Arabtec, said the company is also examining the type of projects it works on.
“The group is executing a more selective approach to project tendering, ensuring new projects deliver appropriate returns and, in turn, long-term shareholder value,” he said.
Arabtec expects to announce its audited 2015 financial statements in March.
