News Column

Closures cause drop in Depa\ s profits

September 1, 2014

ArabianBusiness.com Staff



Dubai-based fitout contractor Depa has revealed a 22% drop in net profit for the six months to June 30 of $8.2mn (AED30.3mn) - down from (AED38.7mn) in the corresponding period a year earlier.

The lower profits were due to a decline in revenues, which fell to $250.6mn (AED920.3mn) from $275mn (AED1.01bn) in 2013.

The company said that the decline was due to the fact that it had closed operations in a number of lossmaking territories, including the UK, Jordan, Azerbaijan and India. Revenues also fell in Qatar and Angola because major projects being undertaken there were nearing completion.

Interim CEO Nadim Akhras said market conditions were tough but that the firm is continuing to look at other markets where it believes it can build a presence.

"The GCC construction market has witnessed a significant shift towards lower-margin projects as inexperienced players and new entrants look to gain market share. "As a result, we continue to be extremely selective in what we bid for and how projects are priced.

"Furthermore, our diversification strategy has allowed us to counteract the challenging situation for contractors in the GCC. We are looking at new opportunities in South Asia, Africa and CIS, having signed over AED579mn ($157.6mn) of new contracts in the first six months of the year, and are now approaching the second half of the year with cautious optimism."

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The firm has targeted Sri Lanka as a key market as a large number of tourist hotels are curreently under development. In Africa, it has identified Nigeria as a potential market.


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Source: Construction Week (United Arab Emirates)


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