Arabtec returns to profit in 2017

March 15, 2018

undefinedArabtec Holding is likely to pay out its first cash dividend to shareholders since 2012 after returning to profit in 2017 thanks to a corporate and financial overhaul and a raft of new contract wins.   

The contractor reported net profit attributable to parent of AED 123.1mn ($34mn) in 2017 compared to a net loss of AED 3.4bn in 2016. 

Full year revenue of AED 9.1bn ($2.5bn) increased by 12% from AED 8.2bn in 2016, the firm said in its financial statement.  

Furthermore, the Board of Directors has recommended the distribution of a final cash dividend for the first time since 2012. 

The group’s backlog remained strong at AED 17.2bn, supported by a number of contract awards including most recently, Forte Phase 2 from Emaar, Villanova from Dubai Properties and the from Tav Tepe Akfen Construction which contributed AED 2.2bn in Q4 17. 

Arabtec has stabilised the business following the significant challenges faced in 2016. In June 2017, the company raised AED 1.5bn through a rights issue and extinguished the company’s accumulated losses through a capital reduction which strengthened the group’s capital structure. 

Group chief executive officer Hamish Tyrwhitt said: "To support the delivery of our key objectives, we have strengthened our management team through a number of key senior appointments that have brought significant regional and international experience to the Group.  

"This is positively impacting the business through a more performance-driven culture with clearer accountability driven by rigorous project and business reporting together with regular reviews and a strong emphasis on cash collection and closing out legacy projects.” 

Arabtec remains confident that the strength and quality of the new work pipeline in the UAE and the region will continue to support the group’s growth aspirations. 

A series of robust risk management tools have been rolled out across the business to strengthen governance around tendering new work through the roll-out of the 4-Gate Work-Winning Process, the company said. This has provided Arabtec with a "clearer understanding of addressable markets including core competencies, geographies, sectors and clients". 

In the second half of 2017, the company divested its 14.6% stake in Jordan Wood Industries, a listed Jordanian company that manufactures office and household furniture as well as its 67% stake in House of Equipment which specialises in trading and rental of heavy construction equipment. 

Arabtec sees further opportunities to better align the business in 2018. Tyrwhitt added: “In 2018, our focus moves to re-basing the business through a range of initiatives focused on productivity, efficiency, innovation and strengthening the balance sheet. 

“Operationally, we will be looking closely at applying innovative approaches to enhance our work and delivery methodologies. With a solid performance in 2017, I look forward to the year ahead as we continue our path towards sustainable growth and shareholder returns.”

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