UAE's Arkan reports 38% drop in H1 net profit
The UAE-based supplier said additional costs associated with the continuity of its Al Ain Cement Factory had impacted profits for the first half of this year
Arkan Building Materials has released its financial results for the first half of 2018, posting roughly a 38% drop in net profit compared to the same period in 2017.
According to a statement on Monday, net revenues for H1 2018 stood at $128.2m (AED473.6m), an increase of 3%, compared with $125.1m (AED459.6m).
Touching on the uncertainty over the continuity of its quarry, the Al Ain Cement Factory, Arkan said the facility has started “blending a portion of imported limestone from Oman with its own limestone resulting in an additional cost of $3m (AED11m) for this period”.
This additional spend, the group said, impacted profits for H1 2018 with results also impacted by “additional land lease rental”.
Net profit for the period stood at $4.2m (AED15.5m), roughly a 38% drop of H1 2017’s figure of $6.8m (AED25m).
Arkan said it was “confident that an agreement will be reached with the authorities regarding the quarry which will help avoid additional import costs from Oman”.
Despite falls in profit, Arkan said the rise in net revenue was a result of “strong sales of pipes, blocks, dry mortar and bags, notwithstanding a very competitive market situation”, adding that Anabeeb – the group’s pipes division – increased its market share in the UAE and abroad for its GRP and PVC products.
The supplier’s blocks division also had a solid start to 2018, penetrating the Dubai market by winning new contracts for blocks, pavers and dry mortar products, the production capacity of the latter increasing from 165,000 to 222,000 tonnes per annum.
Speaking on the results, Arkan chairman, Eng. Jamal Salem Al Dhaheri, said: “Our Pipes, Blocks and Dry Mortar products are generating strong sales and profits, partially offsetting the market challenges we face in our Cement Division.
“Our strategy to develop a more diversified platform of building material products is creating a more balanced business and will support Arkan through future market cycles.”