Arabtec CEO quits; firm's revenue hits $1.54bn
Dubai, February 27, 2013
Dubai's Arabtec Holding today announced that its chief executive Riad Kamal has resigned. The company named current managing director Hasan Ismaik as its new chief executive.
Arabtec, meanwhile, reported a 15 per cent rise in 2012 revenue to Dh5.66 billion ($1.54 billion), largely driven by growth in its Saudi Arabia and Kuwait operations.
The company, which built the world’s tallest building, the Burj Khalifa, experienced a strong year for new contract awards, resulting in an increase of 27 percent in its backlog to Dh17.9 billion as of December 31, 2012. The backlog has since risen to Dh21.4 billion, following awards in 2013 of the contracts to build the Louvre Abu Dhabi and the Fairmont Hotel in Abu Dhabi, the company said.
Net profit was impacted by an increase in SG&A expenses and other one-off items, it said. Arabtec posted a net profit of 139.2 million dirhams in 2012 compared to 221.1 million dirhams the previous year.
One-off gains fell to Dh33.8 million in 2012 from Dh142.3 million in 2011, a year when the company reversed provisioning for bad debt. The company booked Dh86.1 million of income from investments in 2012, including income from proceeds from the sale of Nakheel bonds of Dh80.5 million.
Removing the impact of one-off items, normalised EBITDA (earnings before interest, tax, depreciation and amortisation) was Dh432.9 million in 2012, almost unchanged from Dh434.3 million in 2011.
The company derived 62 percent of its revenues from operations in the UAE in 2012. Meanwhile, its Saudi Arabia operations – principally residential construction projects -- gained in importance, generating Dh1.34 billion of revenue in 2012, more than double comparable revenue in 2011.
The company’s gross margin remained robust at 10 per cent in 2012, compared to 11 per cent in 2011.
The full year 2011 earnings have been restated by an amount of Dh76.8 million in revenues and net income mainly to correct the application of accounting policy, primarily related to revenue recognition from four projects. The restatement will not impact the total value of the four projects to Arabtec.
Arabtec managing director Hasan Ismaik said: “2012 was a solid year for Arabtec, with revenue growth, stable margins and strong new project awards. The construction industry has moved back into growth, and Arabtec is well placed to benefit.
“The company’s Dh21.4 billion backlog of on-going and future projects gives us clear visibility of the strength of our earnings. Arabtec now has the right platform to take the business to the next level of its development, by applying our core competencies and skills to other growth sectors and markets. The company’s future capital raising reflects the Board’s ambitious yet realistic expansion strategy, the strong brand, and our institutional strength to grasp growth opportunities,” he said.
Arabtec Holding is currently working on some of the most prestigious projects in the Middle East, such as the Midfield Terminal development at Abu Dhabi International Airport and a regeneration project in the centre of the Qatari capital, Doha, but is also expanding into other regions. The company won its first project in Russia in 2012, and is actively exploring opportunities in selective fast-growth markets, it said.
The company is also looking to complement its strong presence in residential and commercial projects, with an expanded footprint in fast-growing and sophisticated construction sectors in the Middle East, such as oil and gas, infrastructure and power construction.
The Board of Directors has agreed to raise the capital of the company through a rights issue of up to Dh4.8 billion and convertible bonds or other debt instruments of up to Dh1.6 billion. The proceeds will be used to finance Arabtec’s growth strategy, to be implemented through organic growth, acquisitions, and international joint ventures, it said.
The board has decided to take the prudent step of conserving cash for implementation of its strategy and will not pay a dividend for 2012, it said. _TradeArabia News Service