Arabtec Profit Halved on Bad Debts

Arabtec Holding, the UAE’s largest contractor by market value, on Tuesday said its profit for 2009 nearly halved as it posted its first-ever quarterly loss after provisioning Dh294 million for bad debts. The Dubai-based company, which is in the process of selling a 70 per cent stake to Abu Dhabi’s Aabar Investments, said net profit for the year fell 48 per cent to Dh494.9 million from Dh958.05 million in the year-earlier period. “The 2009 result is arrived at after charging Dh294 million as allowances for bad debts... in view of the uncertainties affecting certain of the group’s contracting receivables,” Arabtec said in a statement posted on the Dubai Financial Market web site. Recently, Arabtec chief executive Riad Kamal said the company, which was owed well in excess of Dh1 billion across all its business lines, was “struggling” like any other company in the local construction market. He also said “no money was coming through from Nakheel,” Dubai’s property developer. Arabtec shares closed trading on Tuesday 2.3 per cent lower at Dh2.10 in a broadly negative overall market. Arabtec didn’t provide a breakdown for the fourth quarter result, but according to Zawya Dow Jones calculations the company made a net loss of about Dh110 million in the fourth quarter as against a net profit of Dh197.9 million in the corresponding quarter of 2008.

According to Reuters calculations based on previous financial statements, the fourth quarter loss was only Dh16.8m compared to a profit of Dh184.81 million last year. On Sunday, Arabtec said the due diligence date for its merger with Aabar Investments of Abu Dhabi had been extended to April 16. In the first nine months of 2009, the company made Dh511.7 million profit. In the backdrop of a worsening slump in construction activities in the UAE, Arabtec has been looking out for overseas ventures. Last year, Arabtec signed a deal with a unit of Saudi Bin Laden Group and Prime International Group to set up the joint venture firm Arabtec Saudi Arabia to tap building work in the Middle East’s largest economy. Last month, Kamal told Khaleej Times that his company would focus on winning more projects in Abu Dhabi, Saudi Arabia and Qatar in the next several years since there were fewer opportunities in Dubai at the moment. Yesterday’s posting on the DIFM Web site coincided with a Meed report about Arabtec’ bidding for a major property development encompassing a complex of five high-rise residential and commercial towers and a 360-room five-star hotel on the shores of the Caspian Sea in Azerbaijan. Arabtec, which earlier on Tuesday said its board had agreed to raise its stake in UAE-based House of Equipment, is expected to release its full-year results today.