New markets and innovative solutions position Arkan well through current market cycle
Abu Dhabi, UAE; 14 February 2017
Arkan Building Materials Co. PJSC (ADX: ARKAN) (“Arkan” or “the Group”), a leading construction and building materials company in the UAE, today announced its preliminary financial results for the year ended 31 December 2016.
2016 saw considerable operational progress, with sales volumes increasing across new markets in the UAE, as well as across new export markets. The Company has increased its footprint in the Dubai market, given the large number of construction projects underway; and is on-site at major projects, including Dubai South. Arkan is also making progress selling its speciality products into export markets, especially South East Asia, where it has seen considerable success selling Glass fibre Reinforced Polymer (‘GRP’) specialized pipe solutions and manholes in Manila and Hong Kong.
Arkan has also been partnering with clients to offer complete turnkey solutions for projects and to help them achieve maximum efficiency. Arkan provides expertise and support on site and in the laboratory around product development, quality, installation and maintenance. During 2016, Arkan continued to drive innovation across its product range, launching dry mortar products and increasingly high specification speciality blocks and pavers for prestigious projects, such as the new Abu Dhabi airport and Fairmont Marina residences and Sheikh Zayed Grand Mosque Centre in Abu Dhabi. Customer requirements for increased product performance and quality, during the year continued to keep Arkan at the forefront of new technological development.
The pressure on market prices, however, continued across the product range throughout the year and consequently 2016 revenues were AED 807.7 million, compared to AED 876.9 million in 2015.
At the year-end, Arkan decided to temporarily consolidate the production and sales of cement in a single location, namely its Al Ain Cement Factory, one of the most efficient plants in the UAE. This is expected to generate savings in excess of AED 45 million over the course of 2017.
Eng. Jamal Salem Al Dhaheri, Chairman of Arkan commenting on the results said: “We continue to strategically drive the business through this harsh current market cycle, offering more products in more places than ever before. We are opening new markets at home and abroad, introducing more innovative products and offering engineering solutions, which allows us to become true partners to our clients, not just a supplier. This approach sets our business apart and, over time, will allow for sustainable client relationships and consequently improved operating margins. At the same time, we have taken important and tough decisions to reorganise our operations and position the business for the future.”
For the 2016 financial year, the Group achieved a net profit of AED 75.7 million, compared to AED 101.1 million in 2015. This was mainly due to an exceptional loss related to damage caused by heavy rainstorm that occurred in March 2016, as previously reported. Cost efficiencies from better procurement of raw materials, use of recycled materials and renegotiation of transportation contracts outweighed the reduction in profit from price decrease in 2016 compared to 2015 estimated at AED 18 million, resulting in gross profit margins increasing by 9% to reach 36%. Earnings per share for 2016 were 4 fils compared to 5.8 fils in 2015.
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Arkan Building Materials Co. PJSC (ADX: ARKAN), is a public joint stock company specialising in manufacturing of building and construction products in the UAE. Arkan’s vision is to build a large integrated building products business that serves the local and regional construction industries. Arkan’s portfolio companies include Emirates Cement Factory, Emirates Blocks Factories, ANABEEB and Al Ain Cement Factory. The Company is also developing Arkan Dry Mortar, a high-capacity dry mortar plant located in Al Mafraq, which will produce a range of dry mix products. For further information, please visit our website: www.arkan.ae .
© Press Release 2017
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