(MENAFN- Khaleej Times) The companys revenues costs increased by about 28 per cent on a quarterly basis reaching Dh1.93 billion as a result of the high costs of the projects.
Dubai — The UAE’s largest listed contractor on Wednesday reported a surprise loss of Dh279.8 million despite booking Dh1.79 billion revenues for the first quarter of the year citing reasons of high costs and slowdown in the construction sector.
Workers operate cranes of the Arabtec construction company on top of a high-rise building in Dubai. — AP
The builder of the Burj Khalifa had reported a Dh137.9 million profit and Dh1.78 billion revenues for the March quarter of last year.
The company’s revenues’ costs increased by about 28 per cent on a quarterly basis reaching Dh1.93 billion as a result of the high costs of the projects.
Its stocks prices dropped by around 10 per cent in early trading at the Dubai Financial Market but recovered to 3.53 per cent down at closing price of Dh2.42.
The high cost of the projects coincides with noticeable pressure on the company’s ability to document its claims and variation orders at a time where the construction sector generally witnesses significant pressure due to the economic and political circumstances in the region the company said in a statement.
This has prompted developers to re-prioritise projects and control costs in addition to the negative implications on the spending levels in the region as a result of lower oil prices which all in turn had adversely affected the company’s profits. Real estate sales in Dubai declined 31 per cent in the first four months of 2015 from a year earlier according to Dubai Land Department data.
Commenting on the results Mohamed Thani Murshed Al Rumaithi chairman of Arabtec Holding said: “The construction sector in general and Arabtec in particular are affected by low returns from commercial positions accrued on its projects with developers which has prompted us to adopt a more conservative policy in announcing our projects’ profits and issuing our financial results”.
“We are intensively following up the collection and negotiating on such commercial rights arising from the variation orders and claims to the projects execution; however in order not to face risk and market volatility and as a commitment to the principles of transparency with our shareholders and investors we have been conservative in preparing the financial results” Al Rumaithi added.
The company still has a strong cash position and is able to provide funding and deliver the projects with the highest quality standards which Arabtec is well known for.
Al Rumaithi confirmed that such loss would not affect the performance of the company in the future as well as its capacity to move ahead in its backlog. The projects awarded during Q1 valued at more than Dh1.7 billion and the competitiveness of Arabtec in the construction market are strong evidence of our ability to achieve success and prosperity in the coming period.
Arabtec will continuously consider the impact of these changes on its performance and it will highly focus on collecting and following up the aforesaid commercial rights in order to reduce the risks on its future results.
On the other hand the company continued its strategy to control its expenditures resulting in a favorable reduced general and administrative expenses position of its operations to reach to about Dh139 million representing 29.5 per cent reduction compared with Q4 of 2014 which amounted to Dh180 million approximately.
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