The UAE’s biggest construction group Arabtec Holding on Wednesday declared more than 30 per cent increase in its net profit for the first six months of 2012, compared to same period last year.
The Dubai builder made a net profit of Dh72.5 million in the first half of the year, compared to Dh55.6 million during same period last year, showing a 30.4 per cent rise, according to the financial statement posted by the company on Dubai bourse website.
However, Arabtec suffered a net loss of Dh11.6 million on higher costs and expenses for the second quarter of 2012, compared to Dh29 profit in the same quarter last year. Earlier, this year, the company reported a very strong first quarter result as it earned Dh84.1 million, more than triple over first quarter last year.
The second quarter financial results missed three analysts’ forecasts, who had expected the company to declare an average profit of Dh78 million for the quarter, according to Reuters. Investment bank EFG Hermes, which predicted a higher quarterly profit of Dh93 million for Arabtec, said higher expenses were the main reason for the earnings disappointment, according Zawya Dow Jones.
Ali El Adou, a portfolio manager at The National Investor, said the incurred costs might be due to forward planning from Arabtec. “The company has incurred more costs because they are trying to prepare themselves for the airport project in Abu Dhabi, in addition to other regional projects,” Adou said.
Total revenues for the quarter rose to Dh1.3 billion from Dh1.2 billion reported last year for the same period.
The builder reported a Dh200 million increase in contract costs to Dh1.2 billion for the second quarter compared to Dh1 billion in the same period last year. Administrative expenses increased by 62 per cent to Dh154.2 million.
The company said it acquired the remaining 45-per cent stake held by three separate partners in its subsidiary Gulf Steel Industries for Dh18 million. Arabtec, along with Turkey’s TAV Insaat and Athens-based Consolidated Contractors Company, was awarded a Dh10.8 billion contract from the Abu Dhabi government to build a terminal at the emirate’s airport.
The builder, in which Abu Dhabi state fund Aabar recently raised its stake to 21.6 per cent, is expected to secure more contracts from the capital city. It also named Aabar’s Khadem Al Qubaisi as chairman of the board in May, a sign of the state fund’s growing influence in the company.
The company’s June quarter financial results weighed on its stock price, which tumbled four per cent to Dh2.9 on Wednesday. However, Arabtec stocks have soared 101 per cent this year.