DUBAI - Dubai builder Arabtec said on Wednesday that it had swung to a net profit in the second quarter, boosted by profits from its investment in interior designer Depa as well as by cost-cutting.
Arabtec made a net profit attributable to equity holders in the parent of 39.8 million dirhams ($10.8 million) in the three months to June 30, compared to a loss of 186.4 million dirhams a year ago.
It was Arabtec’s second straight profitable quarter; in 2015 and 2016, it consistently posted loses as the company coped with a slumping regional construction market, which has been hit by government austerity measures due to low oil prices, as well as internal management changes.
In an effort to turn around its fortunes, the company appointed industry veteran Hamish Tyrwhitt as its chief executive last November. General and administrative expenses more than halved in the second quarter of this year.
Arabtec recorded profits from associates including Depa, in which it holds a 24.3 percent stake, of 22.9 million dirhams in the second quarter compared with a loss of 34.8 million dirhams a year ago.
It announced a 1.5 billion dirham rights issue earlier this year as part of its recapitalisation programme. Its cashflow statement shows proceeds from the rights issue were 1.1 billon dirhams after deducting the settlement of a loan from a related party.
Arabtec took out a 400 million dirham loan from its largest shareholder, Abu Dhabi fund Aabar Investments, in June 2016. The company’s financial statement says Arabtec settled the outstanding amount of the loan with the proceeds of the rights issue.
(Reporting by Hadeel Al Sayegh; Editing by Andrew Torchia)
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