Depa, one of the world’s leading interior contracting companies, has registered a net profit of Dh46 million ($12.5 million) for the nine months compared to Dh11 million ($3 million) for the same period last year.

Announcing the results, Depa said the jump in profit was mainly because of the business generated by its German subsidiary Vedder which specialises in the fit-out of luxury yachts and private jets.

Over the last year, Vedder has successfully integrated the Loher acquisition into its business and as a result, generated a year-to-date (YTD) net profit of Dh14 million ($3.81 million) compared to a net loss of Dh5 million ($1.36 million) last year.

The net profit after non-controlling interest for the third quarter was Dh19 million ($5.17 million) compared to a loss of Dh22 million ($5.99 million) last year, said the Dubai firm.

This significant increase came from higher contract profits despite slightly reduced revenues of Dh517 million ($140.7 million) over last year's Dh577 million ($157.09 million). The performance demonstrates the effectiveness of Depa’s current strategy to be more selective by signing contracts with low risk profiles and healthy margins.

Depa’s operations in the Far East continue to perform well, doubling the YTD profit from Dh16 million ($4.35 million) in FY2013 to Dh32 million ($8.71 million) in YTD 2014.

The company said it was streamlining its business by closing down loss-making businesses and this has also contributed to the four-fold increase in net profit as compared to YTD 2013.

Depa’s balance sheet remains strong with total assets of Dh3.17 billion ($862.98 million) as on September 30 and a total equity of Dh1.49 billion ($405.62 million).

Nadim Akhras, the interim group CEO said: “Our strategy to be extremely selective in what we bid for and how projects are priced is starting to see tangible results with contract gross margins in third quarter of 2014 returning to healthy margins significantly higher than what we achieved in the first nine months last year."

"We are seeing strong business generation coming from our overseas operations and an increase in hospitality sector work as the construction cycle starts to enter the interior contracting phase," stated Akhras.
 
"We will continue to drive our diversification strategy which creates value and mitigates business risk during different market cycles as well as evaluate opportunities in new higher margin emerging markets," he added.

According to him, Depa’s backlog as of September 30 surged 8.7 per cent to Dh2.63 billion ($715.97 million) compared to Dh2.42 billion ($658.8 million) as of June 30, 2014.

The increase came from a strong surge in business from Asia, moving from 30.3 per cent of our total backlog at June 30 to over 36.3 per cent at September 30 as the company’s subsidiary, Design Studio Group, signed a Dh220 million ($59.9 million) contract with Singaporean real estate owner, developer and operator OUE.

From a sector perspective, during the third quarter, the backlog saw a continued increase in interior contracting for the hospitality industry which started earlier in the year and at the period end accounted for 49.4 per cent of the backlog.

In line with Depa’s current policy to be very selective in signing new contracts, the company secured a Dh108 million ($29.4 million) interior fit-out contract for Emerald Palace Kempinski Hotel at Palm Jumeirah in Dubai during the third quarter, in addition to other projects.-TradeArabia News Service