Mixed Q1 2019 for Dubai's Depa; acting GCEO says review under way

Acting GCEO Kevin Lewis says group-wide operational review is under way as Asian unit DSG's numbers lead to overall net loss

Depa Group is listed on Nasdaq Dubai.
Depa Group is listed on Nasdaq Dubai.

Nasdaq Dubai-listed interior construction and manufacturing firm Depa Group said the financial performance of its key business units in Q1 2019 “lagged” behind corresponding 2018 performances, both from a revenue and pre-tax earnings perspective.

Although Depa Interiors, Deco Group, and Vedder – the group’s yacht fit-out business – all turned a profit in Q1 2019, Depa Group generated a net loss due to the financial performance of its Asian subsidiary, Design Studio Group (DSG).

DSG reported $11.1m in revenues for the opening quarter of this year, a 62% decline on the same period in 2018.

The Asian firm's revenue also decreased significantly year-on-year, Depa said in its latest trading update.

The firm attributed the decline in part due to a “delay in its international projects, impacting factory utilisation and overall profitability”.

Depa has also the agreed terms for its disposal of Linder Middle East, which it expects to complete in H2 2019.

The decision came after Depa’s 2017 strategic review, where its shareholding in the Business Bay-based interiors group was identified as non-core.

Overall, Depa has continued to maintain a positive net cash position, excluding restricted cash, of $15.3m (AED56.2m).

Its backlog, as of 31 March, stood at $599m (AED2.2bn) – up 13% on the same period last year.

Depa said its outlook for the remainder of 2019 was mixed, noting the market in the Middle East holds “both structural challenges as well as opportunities”.

The trading update comes less than a month after Hamish Tyrwhitt stepped down as Depa Group’s chief executive officer, effective 1 May.

In the group’s latest trading report, Kevin Lewis, acting group CEO, said a “group-wide operational review is under way and where required, swift action will be taken”.

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