Arabtec books second largest quarterly profit ever

Arabtec Holding, the largest UAE construction firm by market value, made its second-biggest quarterly profit ever in the fourth quarter as profit margins improved and it expanded regionally.

Profit in the three months to December 31 surged 160% to 151 million dirhams ($41.11 million), Arabtec said in a statement on Saturday, topping four of six analysts' forecasts in a net profit survey by newswire Reuters last month.

Analysts' forecasts in the survey ranged from 102.61 million dirhams to 164.32 million dirhams, for an average of 136.95 million dirhams.

"Arabtec financial results show tremendous growth in scope and nature of operations as a result of implementing a... strategic expansion policy," Arabtec chief executive Riad Kamal said in the statement.

Profit margins on projects in the UAE, which include the $20 billion Burj Dubai development that features the tallest building in the world, were improving because construction pricing rates more accurately reflected costs, Kamal said last year.

The firm operates nine subsidiaries in Dubai, Abu Dhabi and Qatar, helping "increase consolidated revenues and improve profit margins", it said. The firm said last week it had won its first project in Syria from Emaar Properties.

Gulf Arab economies are expanding on a near five-fold jump in oil prices since 2002, which has spurred a real estate and construction boom.

The company posted profit attributable to shareholders of 494 million dirhams, or 0.82 dirhams per share, in 2007, compared with 217 million dirhams in 2006, it said in a statement.

Arabtec said in November a settlement with up to 35,000 striking workers in Dubai would increase the builder's costs by about 1%. Labourers had protested 10 days over wages.

The firm, whose shares are listed on the Dubai bourse and the Morgan Stanley Capital International emerging markets index, surged 15.3% last week to close at 11.1 dirhams on Thursday.

Shuaa Capital has a fair value target of 15.6 dirhams and HSBC a 14.5 dirham target price on the stock.

The public owns 55% of Arabtec, with 49% open to investors who are not nationals of the UAE.

Arabtec made 58 million dirhams in the fourth quarter of 2006. (Reuters)