Wednesday, May 09, 2012
--First quarter net profit at AED84 million versus AED26.62 million year earlier
--Results beat most analyst forecasts
--Appoints Aabar chairman as its new chairman
--Arabtec could still face competition for Aabar projects, analysts say
--Considers buying out remaining 45% stake in steel subsidiary
(Recasts lede. Adds analysts comments, details throughout, closing share price.)
By Tahani Karrar-Lewsley
Of ZAWYA DOW JONES
DUBAI(Zawya Dow Jones)--Arabtec Holding (ARTC.DFM) on Wednesday said first-quarter net profit more than tripled as the Dubai-based construction firm continued work on ongoing projects and commenced new ones, but analysts warned that the company, which named a new chairman, could face more competition in Abu Dhabi going forward.
Arabtec's first-quarter net profit jumped to 84.09 million U.A.E. dirhams ($22.9 million) from AED26.62 million in the same period in 2011, according to the company's financial statements posted on the Dubai bourse website.
The results far exceeded the Beltone Financial forecast for net profit at AED41 million and Global Investment House's prediction of AED42.1 billion.
Revenues for the period rose to AED1.29 billion from AED1.24 billion a year earlier.
An analyst at Gulfmena Investments in Dubai said the bottom line was boosted by an exceptional revenue recognition. "The numbers came in strong, it's mainly in line with Q411 with an extra AED50 million beefing up the bottom line from revenue recognition. Other than that, it's the same as Q411 and going forward expectations are for more work from Aabar," said Marwan Shurrab.
Arabtec said the first quarter profit reflected the results of the group's ongoing work, and new projects commenced during the period which are not significantly affected by any seasonal or cyclical operations.
Arabtec also said in a separate statement it was considering buying the remaining 45% stake in its subsidiary, Gulf Steel Industries, or GSI,--of which it already owns 55%--after the three other partner shareholders in GSI received offers to sell their shares.
"The Board provisionally authorized the CEO of the Company, Mr. Riad Kamal, to negotiate the best possible price for acquiring a further 45% in GSI so long as it did not exceed the valuation originally obtained on the said subsidiary," the company said in the disclosure.
The construction firm also named Aabar Investment Chairman Kadem Abdulla Kadem Butti Al Qubaisi as its new chairman.
In April, Aabar Investments raised its stake in Arabtec to more than 10%, making it the single largest shareholder in the Dubai-based company and Kamal at the time said he would welcome a further rise in Aabar's stake as it signified strong governmental support for the company.
Earlier Wednesday, China State Construction Engineering Corp. said it signed a $2 billion co-operation agreement with Aabar and Industrial and Commercial Bank of China which will see CSCEC undertake construction of hotels, office buildings and high-end residential buildings in Abu Dhabi, while ICBC will provide financial support to Aabar, which would in turn get its revenue from oil trading for repayment.
Analysts said this may signal competition for Arabtec in securing Aabar contracts going forward.
Arabtec shares closed down 5% at AED3.16 Wednesday in largely negative market.
-By Tahani Karrar-Lewsley and Nicolas Parasie, Dow Jones Newswires, +9714 446 1698, tahani.karrar@dowjones.com
Copyright (c) 2012 Dow Jones & Co.
(END) Dow Jones Newswires
09-05-12 1010GMT
