UAE’s Arkan says that group revenue fell to $105mn in H1 2020 due to COVID-19 crisis

Decrease in revenue offset by rigorous cost saving programs, building materials supplier says

The supplier’s cement, dry mortar and blocks businesses were negatively affected by the pandemic

Arkan Building Materials Company, the UAE-based supplier, has said that its group revenue for the first half of 2020 fell to $105 million from $125 million the previous year, primarily due to the limitations resulting from the measures taken to counter the spread of the COVID-19 coronavirus.

The decrease in revenue was offset by rigorous cost saving programs that covered vital processes, such as raw material prices negotiation, reduced outsourcing services, reduced manpower cost, higher efficiencies in energy utilisation, coupled with lower electricity cost as a result of the Abu Dhabi Government’s ‘Electricity Tariff Incentive Programme’, which supports the industrial sector.

In parallel to these programmes, the company said that it focused on maintaining its market share by securing supply to all active projects.

Announcing its consolidated H1 results, Arkan said it remained profitable with a net profit of $571,746 for the first six months despite the pandemic and its negative impact on the building material sector.

However, this was compared to a net profit of $2.31 million last year, before one off gains of $6.88 million from the sale of scrap assets at the Emirates Cement Factory and proceeds from an insurance claim in the Cement Division.

While the company’s cement, dry mortar and blocks businesses were negatively affected by the pandemic with a marked slowdown in sales despite solid order pipeline; revenues from Arkan’s GRP Pipes segment doubled to $11.78 million, versus H1 2019, due to significant market share gains. This has again shown the value of a broader diversified business.

On the results, chairman Engineer Jamal Salem Al Dhaheri said: “Arkan has proven its ability to manage through even the toughest market environment and still remain profitable.  This was due to the strong and decisive measures taken by management to implement over $8.16 million of cost improvement initiatives across the business, as well as the team’s ability to continue the reliable and uninterrupted supply of product to customers.”

Arkan continues to be recognized as one of the largest and most respected building material suppliers in the Emirates, with a diversified portfolio of high-quality products and services and a strong order book.  We will manage the business prudently through the remainder of the year and believe we are well positioned to emerge stronger as the pandemic passes, and markets recover,” he concluded.



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