Arkan Building Materials' Q1 revenue up 7%, profit drops

Revenues from Blocks and Dry Mortar were stable

  
Image used for illustrative purpose. Construction workers attach a granite block to a crane in Singapore

Image used for illustrative purpose. Construction workers attach a granite block to a crane in Singapore

REUTERS/Vivek Prakash

Arkan, a leading construction and building materials company in the UAE, has announced that its group revenue for the first quarter rose 7 per cent to hit AED223.53 million ($61 million) from AED208.17 million ($57 million) for the same period last year.

Announcing its consolidated financial results for the three months to March 31, Arkan said this growth in revenue was mainly due to the significant increase in sales of clinker to export markets that offset lower cement sales volumes and reduced average selling prices given the more challenging local construction market.

Revenues from Blocks and Dry Mortar were stable year on year and profit from GRP Pipes too increased due
to the segment’s ability to achieve better margins, it stated.

However, the group’s net profit for the first quarter fell to AED1.21 million from AED10.53 million last year, which was a period prior to the onset of the Covid-19 pandemic.

The reduction in profit in the reported period was due to delayed construction projects, lower selling prices as well as an increase in raw material prices. Despite the challenging market backdrop, GRP Pipes and Bags subsidiaries saw a notable increase in profit, as operational improvements helped generate better margins.

Arkan’s leadership continues to implement a series of cost saving initiatives to adapt to the new market dynamics and improve the company’s profitability.

The cost rationalisation programme, which was implemented in Q4 2020 led to AED7 million of cost savings in the first three months of 2021.

Commenting on the results, Chairman Engineer Jamal Salem Al Dhaheri said: "Arkan continues to navigate a complex and highly competitive market environment with meticulous focus on enhancing efficiency and lowering operational costs to improve profitability and maintain its market position."

"The impact of the pandemic on the construction and building materials sector will continue for the foreseeable future, and our ability to adapt to the new market reality now, will be key to ensuring long-term business sustainability and a return to growth," he noted.

"Despite the challenging conditions, we remain confident that the actions being taken by the Abu Dhabi Government will continue to support that recovery," he added.-TradeArabia News Service

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