UAE's Arabtec posts 108% profit hike in second year of steady growth
Dubai-listed contractor behind ongoing Adnoc and Damac projects marks eighth consecutive quarter of profitability
UAE construction giant Arabtec Holding has reported its second successive year of growth, with 2018 profits rising 108% to $69.7m (AED256m) after the company continued to cut debt and boost cash flow.
Arabtec, which describes itself as a social and economic infrastructure builder, strengthened its presence in the UAE, Saudi Arabia, Egypt, and Bahrain over the last 12 months, with its latest results marking its eighth consecutive quarter of profitability.
Big wins last year included an $871.2m (AED3.2bn) contract for Phase 2 of Adnoc LNG’s Gas Development Expansion project; a deal to deliver construction and mechanical, electrical, and plumbing (MEP) services for Damac Properties’ Akoya Oxygen villas; and the construction of an industrial sewer system for Dubai Municipality.
Reducing the time it took to get paid from Q4 2017's 186 days to Q4 2018's 155 days – a year-on-year reduction of almost a month – supported Arabtec's improved operational and financial performance, a company statement said.
Commenting on the financials, group chief executive officer, Hamish Tyrwhitt, said he was buoyed by the second successive year of profitable growth, adding: “Looking ahead, we will expand our regional footprint, taking advantage of the growing market opportunities in the UAE, [Saudi Arabia], Egypt, Bahrain, and Kuwait to further diversify our backlog”.
The group’s 2018 results revealed that Arabtec's backlog was valued at $4.2bn (AED15.6m). At the time, the company added that it was looking forward to a “solid pipeline” of regional tender opportunities, worth up to $13bn (AED48bn).
The construction company’s continually-improving financial performance comes after years of difficulty.
Following heavy losses, Arabtec implemented a long-term strategic plan that started with a recapitalisation programme in 2017. This saw the contracting heavyweight implement measures such as embedding a performance-driven culture within its workforce and disposing of non-core assets as the first step of its plan.
The business is now in what it calls Phase 3, which aims to grow the business through five goals, including the achievement of net profit and cash flow growth; attracting and developing resources to deliver growth; improving project margins and delivering projects on time; boosting MEP, infrastructure, and specialist construction capabilities; and growing from its existing capital base.
As part of these efforts, the company said it would implement innovative construction methods to make it more competitive in the market. Evidence of this year can already been seen, after subsidiary Arabtec Construction signed an agreement to advance the use of 3D concrete printing in the UAE.