Depa returns to H1 profit but MENA markets weigh

Interiors firm says performance has been 'strong on many fronts'

Depa was responsoble for the Burj Khalifa fit-out. Photo: Getty
Depa was responsoble for the Burj Khalifa fit-out. Photo: Getty

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Depa Ltd, the interior contractor that fitted out the world’s tallest tower in Dubai, on Wednesday reported a first-half profit after a loss in the year-earlier period.

Net income was AED48m ($13.06m) after a loss of AED103.7m in H1 2010, the company said in a statement posted on the Nasdaq Dubai website.

Revenues for the first half of 2011 were AED748.9m, down 11.4% on H1 2010 due to delayed starts and slow progress on certain projects in the MENA region, especially in countries currently facing political turmoil, Depa added.

Excluding the MENA region, the company’s revenues rose by 42.9% to AED297.5m while contract profit margin was 20.4% compared to -3.3% in H1 2010.

Mr Mohannad Sweid, CEO of Depa, said: “Overall performance was strong on many fronts. Our successful diversification strategy reduced the impact of the global macroeconomic and regional geo-political environment on our results and backlog growth.

"Encouragingly, we are witnessing large and mega-projects that were originally delayed finally coming on-stream.

"The company continues to diversify internationally and this will underpin financial performance and backlog growth and allow Depa to capitalise on the market’s momentum in the near future.”

As of the end of June, the company’s backlog stood at AED2.3bn, and had increased by a further AED420m as of August 20.

Depa said over the course of 2011, it had won new contracts of a total value of AED1.47bn resulting in a 24% growth in backlog.

The UAE now represents only 21% of backlog, while MENA is up to 30% and the rest of world has risen to 49%.

The company said it has seen continued significant revenue stream from Asian projects, with the wider region and in particular South East Asia.

Azerbaijan and Saudi Arabia have both proven to be significant contributors to revenue and backlog in H1 2011, Depa added.

The company added that it expected to win large project in the GCC region over the coming year.

"We believe that a second growth run, namely in government-related spending in the GCC and CIS countries may be the around the corner, allowing us to leverage our already-existing operations to further grow in these markets. We also look to continue to sign an increasing number of projects in Asia, as well as augment our portfolio in Europe," Depa added in the statement.

The Dubai-based contractor said in May it had won new contracts included an AED121m deal in Azerbaijan and a contract to fit out a new JW Marriott Hotel in Baku, worth AED41m.

The company in April won an AED11.9m deal to fit out Raithwaite Hall Country Retreat, a luxury country resort in the UK.

Depa reported a 2010 net loss of AED198.2m, as the Dubai-listed firm was hurt by claims over the world's largest tower and goodwill impairment charges.

Depa incurred an operating loss of AED3.8m for the year, excluding a one-off Burj Khalifa interim claim of AED186m.

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