Saudi contractor Al-Khodari's revenue drops by 51% in 2017
The contractor posted a 15% reduction in its 2017 net loss, and said its revenue reduced due to the "significant liquidity challenges" in the market
Saudi Arabian contractor, Abdullah A M Al-Khodari Sons, narrowed its net loss for 2017 by 15%.
The contractor posted a net loss of $27m (SAR101.5m) for 2017, a reduction compared to 2016's net loss, worth $31.8m (SAR119.4m).
While its gross loss widened by 75% to $11.65m (SAR43.7m) in 2017, Al-Khodari recorded a 22.05% annual improvement in its operational loss for the year, which was valued at $7.4m (SAR27.5m).
A "sharp decline in revenue" – which was valued at $138.5m (SAR519.46m) for 2017 – resulted in the gross loss rising by 75%, the company said.
The contractor's revenues reduced by $144.3m (SAR541m) – a year-on-year reduction of 51% – in 2017, with the company attributing the change to a "decline in new project awards", and the "significant liquidity challenges facing the contracting industry due to delay in payments, [as] reflected in [the] slow progress on ongoing construction projects".
Al-Khodari said it managed to narrow its net loss effecting a 48% reduction in its direct costs, which was "mainly due to slow progress on ongoing construction projects".
Decreased bidding activity led the contractor to correspondingly reduce its selling and marketing costs by 31%, while general and administrative (G&A) spend was lowered by 28% "mainly due to [a] reduction in manpower costs and resource optimisation".
G&A costs were able to reduce as part of the contractor's Leaner Al-Khodari Programme, the company said in a filing to the Saudi bourse.
The contractor's other income increased by 25% in 2017, due to an increase in the "auction sale of excess used equipment" during the year.
In November 2017, Al-Khodari announced it had earned a profit from the auction of its equipment fleet held during the month.
The auction, held between 14 and 16 November, saw Al-Khodari sell equipment with a gross value of $9.8m (SAR36.8m).
In a missive issued to the Saudi bourse, the contractor said the auction generated a profit of $3.7m (SAR14m) for the company.
Al-Khodari said that the financial impact of the auction would be reflected in its statements for the fourth-quarter of the year.
The company announced in October 2017 that the auction was a part of its plans to upgrade its fleets.
Al-Khodari reported an 88% decline in contract awards during Q3 2017, adding that its revenues for the period amounted to $29.8m (SAR111.8m), 41% lower than Q3 2016's revenues, worth $50.6m (SAR190m).
In its October 2017 statement to the Saudi bourse, Al-Khodari said the decline in its revenues was caused due to slow progress on project works, in addition to the "decline in new project awards, significant liquidity challenges facing the contracting industry due to delay in payments, reprioritising of projects by the government, and [an] extended slowdown in the construction sector".