Doha airport job cancellation leads to Depa losses
Bad debts on NDIA scheme and two Azerbaijan contracts cost firm $34m
Dubai-based interior design contractor Depa declared a $32.6m (AED: 119.6m) loss for 2012, compared with a profit of $14.7m in 2011, which the company blamed on losses relating to its Doha airport contract.
The company said that revenues increased by 12% in 2012 to $530.8m (AED: 1.94bn), but operating margins fell from 16.6% to 8.1% due largely to losses incurred on the New Doha International Airport project (NDIA), where it was working on a joint venture with German firm Lindner on a $245m contract to fit-out the new terminal building.
The JV was removed from the contract last year, with airport operator Qatar Airways claiming that the company had defaulted on its contract by failing to complete work on time. Qatar Airways has subsequently launched a claim for compensation against the joint venture partners, who have rebutted its claim and argued that statements issued by the airline were "false and misleading".
Depa said that it has recorded bad debts of over $34m (AED: 125m) for 2012, which includes the NDIA project as well as money owing on the Port Baku and JW Marriott contracts it has been carrying out in Azerbaijan.
Despite this, the firm argued that its balance sheet remains strong, with cash in hand of $83.5m (AED: 307m) at year end and a total asset base of $856m.
Moreover, almost half (49%) of its revenues now come from outside the MENA region due to increased project wins by its Asian subsidiary, Design Studio, in markets such as Singapore, China, Malaysia and Thailand.
Chief executive officer Mohannad Sweid said: "We are seeing continued growth in emerging markets, which provided a bright light in an otherwise difficult 2012.
"The modest gains we have posted in our revenues have only masked the reality of an industry suffering a stretched out process of recovery.
"We have used this period to our advantage, restructuring and consolidating our various businesses whilst placing our energy and manpower into improving our geographical and sector diversification through current and backlog projects in countries such as Angola, Azerbaijan and Malaysia. Assuming we are successful and the market rebounds as expected, we are in strong position to reap significant benefits."
UAE-based contractor Arabtec owns a 24% stake in Arabtec, which it acquired in November last year for $65.8m.