Shares in Dubai’s Arabtec down 5% after Q2 loss
Builder said it incurred losses of $195.56 million in the second quarter on the back of higher costs
Shares in the Arabtec fell by over 5% on Sunday after the Dubai-listed builder reported a second-quarter loss on the back of rising costs and a difficult trading environment.
Losses attributable to shareholders for the second quarter amounted to $195.56 million (AED718.3m), compared to a net profit of $27.9 million (AED102.4m) in Q2 2014.
Total losses in the first half amounted to $271.7 million (AED998.1m), compared to a net profit of $65.4 million (AED240.3m) for the same period last year.
In a statement to the Dubai Financial Market, the builder said revenues from continuing operations plunged 8.1% to $490 million (AED1.8bn) in the second quarter, against the same period last year. Revenue for the first half also declined 4.1% to $977.4 billion (AED3.59bn), compared to H1 2014.
The decline in revenues were attributed mainly to a difficult trading environment and rising costs. Direct costs were reported 31% higher in the second quarter and 29% more in H1, Arabtec said.
Following a review of its accounting policies, Arabtec’s board of directors has identified several poorly performing projects and is taking corrective action in response.
To improve results, the company has recently undertaken several cost-cutting measures, including the implementation of an extensive restructuring program, the benefits of which will be reflected in its Q4 results and in 2016, the builder said. “The process will continue into 2016 to further reduce costs and thereby improve overall efficiencies,” the statement noted.
Arabtec, which currently has a backlog of $5.5 billion (AED20.2bn), last month appointed a new acting group chief financial officer, in the wake of the departure of three senior executives. Following the July resignation of Iyad Abdalrahim, former group CFO, the company announced that Ravi Murthy would take his place. This, along with other internal appointments, has improved operational decision-making, Arabtec said.
“The restructuring process, management changes, and the adoption of more conservative policies show Arabtec is on track to enhance its position within the industry, and to enable the company perform in the currently challenging environment,” the statement concluded.
Shares in Arabtec were valued at Dh2.11 at the end of trading on Sunday, a decline of 5.38% on the previous close.
