Company's revenues exceed Dh2 billion, first-quarter backlog grows 28%
Arabtec Holding on Wednesday said its first-quarter net profit surged 121 per cent to Dh138 million on strong delivery, improved commercial review of contracts, and growth of UAE and GCC business.
In a statement, the leading engineering and construction group of companies said its first-quarter revenues rose 39 per cent and increased to Dh2.1 billion compared to Dh1.545 billion in the same quarter last year. The net income, before minority interest, grew 52 per cent to Dh152 million as against Dh100 million in the similar quarter previous year.
"We continued to achieve high growth in profits and revenues, driven by our growing business in the UAE and the region, and more focus on delivery and profitability of projects," said Hasan Ismaik, managing director and chief executive of Arabtec Holding.
The company's board of directors, which approved the first-quarter results at its meeting on Wednesday, welcomed the growth in financial indicators, which will translate into more progress in the business and higher rewards for shareholders.
The first quarter also saw the gross profit margin growing from 12 per cent to 15 per cent, while the net profit margin increased to seven per cent, from six per cent in first quarter last year.
The board also reviewed the results of the annual ordinary general assembly meeting held on April 30, which unanimously approved the distribution of 40 per cent dividends as bonus shares, which effectively increased the capital to Dh4.439 billion, from Dh3.139 billion.
"We are planning a series of acquisitions and mergers in the forthcoming period. We are targeting global players in such high margin sectors as oil and gas, power plants, infrastructure, and facility management of huge industrial plants," Ismaik said.
Arabtec has already completed acquisition of Target Engineering, furthering its ability to bid for small to medium-scale EPC contracts in Mena's oil and gas, power and related infrastructure. It has also expanded its MEP division, through the acquisition of the remaining minority stake in its subsidiary, EFECO, raising Arabtec's ownership to 100 per cent.
"In four years' time, Arabtec will grow from a medium-scale regional player into a global leader in specialised segments of the construction industry. The planned acquisitions and mergers will lead to significant synergies, in terms of accumulated experience, enhanced cash flow and stronger brand," he added.
During 2013, Arabtec jumped to the 117th position in ENR ranking, from 187th in 2012. The company expects to achieve far better ranking in the current year, and to join the top ten by 2018. With its expanding business in the region, Arabtec won Dh26.2 billion worth of contracts in the first quarter of 2014, a growth of 28 per cent over the Dh20.4 billion registered in first quarter of 2013.
The implied total direct and indirect value of projects by the end of first quarter jumped to Dh215 billion. This includes Dh26.2 billion worth of projects in progress. In addition, the company has signed a MoU with Aabar for construction of 36 towers in Abu Dhabi, for Dh21.8 billion. It has also signed another MoU for construction of the Red Sea Astrarium in Aqaba, the first of its kind in Jordan, at a value of Dh5.7 billion. The pipeline also includes the one million housing units in Egypt, for Dh147 billion, and Dh14 billion worth of property development projects announced at Cityscape Abu Dhabi last month.
During the quarter, Arabtec launched five new subsidiaries, to expand the company's reach into new sectors, and in line with the company's strategy. Two of the subsidiaries will focus on infrastructure projects inside and outside the UAE, and a third will be engaged in property development. The other two will focus on education and training of nationals on construction-related disciplines, and on financial services, respectively.
In the UAE, Arabtec signed a MoU valued at Dh21.8 billion to build 36 towers in Dubai and Abu Dhabi, an agreement which will be one of the largest in the real estate sector in the region and Arabtec's biggest project by value in the UAE.
Arabtec also won Dh1 billion contract to build 1,500 Emaar townhouses in Dubai as part of the Mira community in the first phase of the Reem development.