Construction dips as Dubai and KSA indices fall

Major developers see week-long fall amid sobering results in Saudi

Dubai construction stocks have lagged during Cityscape
Dubai construction stocks have lagged during Cityscape

Falls in the Dubai and Saudi indices yesterday were met with a lag for construction stocks, along with sobering new quarterly results for material providers.

The Dubai Financial Markets index closed down marginally to 1,744, though the biggest construction companies fell further for the week which has been dominated by news from the Cityscape conference in Abu Dhabi.

EMAAR Properties and Drake & Scull International both closed up yesterday 1.58% and 1.77% respectively, though this was still an overall decline of 7% and 3% for the week. Deyaar Development PJSC and Union Properties have both been hit by more than 8% and more than 6% over the last seven days. Arabtec, another construction giant, closed at 2.48% from 2.69%, representing a fall of 7.81%.

In Riyadh a fall in the Tadawul from 6,883 to 6,710 over the last week also dragged on the the Tadawul All Share construction and cement indices, which fell from 4,103 to 4,009 and 4,240 to 4,130 respectively.

The Saudi Cable Company reported a monumental 98% hit in net profits compared to last year’s quarterly results, according to latest figures, edging just over SR 1 million (SR 1.07 million) compared to SR 46.27 million during Q1 2009.

Almost SR 80 million and 73% was wiped off the gross profits for the company against 12 months hence, SR 29.15 million from SR 108.10 million. The company said the decrease was due to delays in receipt of orders in Turkish Operations and in shipment of other orders which had been paid for.

Zamil Industrial – whose subsidiaries include Zamil Steel - saw its net profits dip 14% in the first quarter this year compared to the close of 2009, despite seeing an upturn in its figures compared with the first quarter last year.
Net profits from January to the end of March were SR 55.1 million (US $14.7 million), down from SR 64 million in the fourth quarter but above the SR 52.5 million twelve months previously.

The company cited the increase as due to better gross profit margins which resulted from reduction in cost of sales.
“In addition to further reduction of expenses especially in the financial charges which dropped 48 percent compared to the same period in 2009,” it stated. “On the other hand, Q1 2010 results drop compared to Q4 2009 results was due to decrease in revenues.”

However, gross profits and operating profits tumbled compared to the first quarter of last year; the first slipping to SR 215 million from SR 234.3 million - a drop of more than 8% - with operating profits decreasing 19.4% to SR 68.1 million from SR 84.4 million.

Elsewhere in Saudi Arabia, The developer of King Adbullah Economic City told newswires that its first-quarter loss was reduced to 53.5 million riyals from 62.3 million riyals in the year-earlier period. The shares fell 1.6% to SR 9.35.

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