Arabtec Holding, Dubai’s largest listed construction firm, has registered a loss of $119.1 million in the third quarter of the year, it has announced, pointing the finger of blame at the continued decline of the real estate and construction sector.
The contractor’s net loss for the nine months hit $103.45 million, mainly due to the weak performance of Arabtec Construction – one of the group’s subsidiaries – and because of delays in handing over legacy projects.
In a filing to Dubai Financial Market, the company said that the key challenges faced during the period have been project funding, regional geopolitical factors and tight liquidity in the construction sector.
However, it added that the Group’s other subsidiaries continued to turn a profit, with its industrial business, specifically oil and gas, increasing its backlog, which reflects the strong pipeline of opportunities.
Total revenue for the nine-month period declined by 18.5% to $1.58 billion due to the decline in construction business revenue of 15.6% to $1.17 billion, the company added. It explained that this drop was reflective of the weakness of the UAE construction sector, which has resulted in a reduction of construction contract awards.
It added that the group’s backlog remained healthy at $3.67 billion despite a decline in new awards during the first nine months of the year. In addition, in line with the Group’s strategic priority to strengthen the balance sheet, total debt was reduced by $92.83 million during the same time period in 2019.
Furthermore, the group continues to right size its workforce, reducing manpower and support functions in line with the operational requirements of the business reducing costs and improving productivity and efficiency across the group.
Group CEO Peter Pollard said: “We are disappointed with the Arabtec group’s performance during the third quarter 2019. As previously stated, the board and management remain fully committed to handing over legacy projects.”
Many of these projects are in final testing and commissioning stage now and we expect most will be progressively handed over by mid-2020 reducing future risk to the Group, stated Pollard.
“Additionally, we have focused on stabilising the construction business by reorganising the management team, cost optimisation, rationalising our workforce, enhancing corporate governance, implementing initiatives to strengthen the balance sheet and diversifying our backlog towards industrial and infrastructure projects,” he added.