Duba-based Arabtec Holding's first quarter profits more than doubled as the construction major announced plans to join the to the ranks of the top 10 firms in the world through a series of acquisitions and mergers.

Arabtec will grow, in four years, into a global leader in specialised construction segments, said Hasan Ismaik, managing director and CEO of Arabtec Holding. "We are planning a series of acquisitions and mergers with leading international companies as a prelude to venturing into oil and gas and infrastructure," he said.

The company reported a net profit of Dh138 million ($37.56 million) for the first quarter of 2014, marking an increase of 121pc on Q1 2013 net profit of Dh62.5 million net profit. The results were driven by strong delivery, improved commercial review of contracts, and growth of UAE and GCC business, it said.

The company’s Board of Directors, which approved the Q1 results at its meeting today, welcomed the growth in financial indicators, which will translate into more progress in the business and higher rewards for shareholders, said a statement.

The results showed a 39pc growth in revenues in Q1 2014 to Dh2.152 billion, compared to Dh1.545 billion in Q1 2013, while net income (before minority interest) grew 52pc to Dh152 million, from Dh100 million.

The first quarter also saw the gross profit margin growing from 12pc to 15pc, while the net profit margin increased to 7pc, from 6pc in Q1 last year.

The board lauded the executive management’s efforts and achievements, as manifested in the financial results, backlog growth, and geographical expansion.

It noted with satisfaction that Arabtec is firmly on track to become a global leader. Today, it enjoys a strong financial position, with a huge and versatile backlog, and is well positioned to diversify into higher margin sectors, said the statement.
 
The Board also reviewed the results of the Annual Ordinary General Assembly Meeting held on April 30, which unanimously approved the distribution of 40pc dividends as bonus shares, which effectively increased the capital to Dh4.439 billion, from Dh3.139 billion.

The board also vowed full support for the management’s efforts to implement “Arabtec Vision 2018” which will see the company grow into the rank of the top 10 global companies, through diversifying into higher margin strategic sectors.

Hasan Ismaik, managing director and CEO of Arabtec Holding, said: “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.”

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 100pc.  

“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 announced.

“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.

“Today Arabtec is in a good standing, with strong financial position and strong brand value. It has attracted high caliber experts to lead its foray into the strategic sectors targeted by Vision 2018,” Ismaik pointed out.

Through its Vision 2018, Arabtec aspires to grow from a medium-scale regional contractor to the ranks of the top 10 firms in the world. This leap is envisioned through expansion into specialized construction, oil and gas, infrastructure, property development, facility management, franchises, and health care. This expansion will lead to higher profit margins and better returns to shareholders. It will also allow the Company to maintain influence on these sectors and to have stable, recurring returns and will enable the Company’s value to grow many folds.

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 10 by 2018.

Q1 Projects
With its expanding business in the region, Arabtec won Dh26.2 billion ($7.13 billion) worth of contracts in the first quarter of 2014, a growth of 28pc over the Dh20.4 billion registered in Q1 2013.

The implied total direct and indirect value of projects by the end of Q1 jumped to Dh215 billion. This includes Dh26.2 billion worth of projects in progress. In addition, the company has signed a Memorandum of Understanding 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.  - TradeArabia News Service