Dubai contracting giant made a loss of nearly $640m in 2015, blamed rising costs and tough market conditions
Loss-making Dubai contractor Arabtec could break even this year and should return to profit in 2017, its chairman said on Wednesday.
Arabtec was once an investor favourite, its shares soaring to a record high in May 2014 in feverish trade as investors bet that the steadily increasing influence of Abu Dhabi state fund Aabar -- which owns 36 percent of the company -- would lead to lucrative government contracts.
But schemes such as a $36 billion project to build 1 million homes in Egypt or $6.1 billion-worth of property for Aabar in the United Arab Emirates have yet to be realised.
Arabtec's share price has fallen 76 percent from its all-time peak and Arabtec reported a net loss of 2.35 billion dirhams ($640 million) in 2015, blaming rising costs and difficult market conditions. The Gulf construction sector is in a marked slowdown after the slump in oil prices forced governments to rein in spending.
"2015 was a severe year, 2016 is still tough. I am confident of 2017, that's when I see (profit)," Mohamed al-Rumaithi told reporters on the sidelines of the company's annual shareholder meeting.
"For 2016, maybe we will break even," he said, when asked if that meant the company would record another annual loss this year.
Rumaithi said Arabtec aimed to cut costs and this could include job cuts, although he declined to specify how many jobs might go or how much could be made in savings.
"There's some fat to be taken out," he said.
The company also plans to streamline its operations: its most recent financial statement lists more than 50 subsidiaries.
"We are a construction company, we will concentrate on our core business (of) construction," said Rumaithi. "If it's not related, we're out; if it's related we're still in."
Arabtec will go to banks for funding but there will be no bond issues for the time being, he said.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.