Arabtec warns of more trouble ahead

|By TAP Staff|Arabtec reported losses for a fourth straight quarter with certain provisions and reversal of some previously recognized numbers. The company also warned of difficulties in the regional construction sector in 2016.

The  share price of Arabtec fell more than 80 percent from a May 2014 peak as an important project in Egypt for the construction of 1 million homes remained in a limbo and its chief executive quit following disagreements with major shareholder Aabar.

Arabtec made a net loss attributable to equity holders in the parent of 944.8 million dirhams ($257.26 million) in the three months to Sept. 30, it said in a statement to the Dubai bourse. This compares with a profit of 68.7 million dirhams in the corresponding period of 2014.

The company’s losses have steadily worsened since falling into the red in the fourth-quarter of 2014. Its combined losses for the past four quarters total 2.06 billion dirhams, Reuters data shows.

Arabtec said its third-quarter loss was partly due to reversing 379 million dirhams of previously recognised claims plus provisions of 136 million dirhams against receivables.

“The regional construction market is currently very challenging, a dynamic that is expected to persist throughout the remainder of 2015 and possibly into early 2016,” Arabtec’s statement said.

The firm’s third-quarter revenue was 1.6 billion dirhams, versus 2.1 billion dirhams a year earlier.

The company has undergone major management and board upheavals over the past two years, including the departure of its former chairman, chief financial officer and ex-CEO Hasan Ismaik.

Ismaik, who left in June 2014, had vowed to make Arabtec one of the 10 top companies globally by 2018 and the company’s backlog multiplied under his charge.

But many of these agreements failed to become firm orders and the company has “introduced a more selective approach to project targeting”, according to Wednesday’s statement.