By Gavin Gibbon
Losses attributed to Arabtec Construction arm as revenue drops $323m for six-month period
UAE-based building giant Arabtec Holding is to call an extraordinary general meeting to discuss future options for the group after posting a net loss of AED794 million ($216m) for the first six months of the year.
Revenue also dropped from AED4.213 billion ($1.147bn) in the first six months of 2019 to AED3.026bn ($824m) for the same period this year.
The losses were attributed to Arabtec Construction, while other core businesses, including Target (industrial), Arabtec Engineering Services (infrastructure) and EFECO (MEP) were said to be trading profitably.
In a statement to Dubai Financial Market (DFM), the company blamed the losses on tight liquidity in the real estate and construction sector, a slowing real estate market resulting in few new awards, limited settlement and recoverability of contractual claims, and the impact of Covid-19.
It read: “The board, having considered the current challenging business and economic environment as well as the accumulated losses as a percentage of shareholders equity, together with the increased future funding requirements of the group, will call for an extraordinary general assembly meeting to discuss and determine the future options for the group.”
It added that the company is in the process of appointing an advisory firm to assist with capital and debt restructuring.
It comes after Arabtec reported a AED774m ($211m) loss for 2019, a substantial drop from the AED256m ($70m) profit announced in 2018.
Under UAE Federal Law, the general assembly must be held within 30 days and, based on the options presented, shareholders will be required to vote on dissolving the company or establishing an appropriate restructuring plan.
“The board and management will work collaboratively with all regulatory bodies during this process,” said the statement.
Boyd Merrett resigned as chief executive officer of Arabtec Construction in October last year. Merrett had been in the position since July 2017 and was replaced “until further notice” by Wail Farsakh, the former general manager of Dutco Balfour Beatty, who was only appointed group chief operating officer in September 2019.
Waleed Ahmed Al Mokarrab Al Muhairi was appointed as the new chairman of Arabtec in July, replacing Mohammed Thani Murshed Al Rumaithi, who resigned from the role.