Taking stock

As the industry revs back to life, how have you used the past month?

Ben Roberts.
Ben Roberts.

It is tempting to speculate how companies have used the relatively quiet period during Ramadan.

It is probably the case that it will be determined by how well your company might have performed so far this year. Are you looking to cut losses or invest in greater work capacity; maintain the business you have or look again at new markets?

Half-year financial statements across the construction industry can be deceptive in how you view companies in the mid-to-long term. Profits can either indicate the fruits of well-timed business expansions or, if you are a material supplier, higher production capacity.

Or they could be the result of one-off events, such as a sale of assets. Losses could either see you at the mercy of declining demand – again, particularly for material suppliers – or a temporary dip while awaiting the delayed proceeds of a number of astute moves.

Aldar Properties might be a good example of the latter. Total revenues for the first six months of this year fell by more than half compared to the same period last year, and investment property gains were hit by fair value accounting, but it has secured more than AED1.567 billion of additional funding.

Sales fell, but the AED695 million it did make “will be recognised in future periods”, the company states tantalisingly.

Cement & Gypsum Products in Oman also indicated that the company’s OR300 million net losses for the six months were also due to a kind of limbo between old projects and new. In truth this reminds me of the euphemism people give to avoid saying they’re unemployed – instead, they are “between jobs”.

It’s a tough market for the grey stuff, however: even if sales increased, prices sank. One analyst told ConstructionWeek that the boom for cement in Oman – where some companies imported to meet demand during 2007-2008 to be subsidised this year by the government – is “over”.

Even in Saudi Arabia, big projects have not stopped market saturation due to so much of cement remaining within its borders – as attested by the “lower sale incentives” highlighted by Southern Province Cement in its statement, and the SR283 million-worth of bags it didn’t shift compared to last year.

The contractor that has most caught the eye is National Marine Dredging Company. This could be because news surrounding ports has been all over the media this summer, topped by the thorough coverage in this week’s issue. With ongoing updates about airport expansions, there’s something warm and familiar about big projects like these.

On the other hand, the numbers are big: NMDC’s contract revenue increased from AED532.2 million to AED950 million comparing the first six months of this year to those of 2009, with gross profits up more than AED100 million. No doubt this will be a company looking to ‘expand’ rather than simply ‘maintain’ itself.

More so than ever, the difference between winners and losers will be wide. As work soon returns to the standard extra hours, how will you be using them?

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