Dubai interiors specialist Depa reports 27% rise in Q1 profit

Boosted by burgeoning hospitality sector in the UAE and elsewhere.

Depa has announced a 27 per cent rise in first quarter profits, thanks to a burgeoning hospitality sector in the UAE and elsewhere.

The Dubai-based interiors specialist said net profit after controlling interest grew to Dh14 million for the first quarter of the year, compared with Dh11m a year earlier.

Depa’s revenues grew by 3 per cent year on year to Dh461m, although the company’s contract backlog at the end of March stood at Dh2.52 billion, down from Dh2.98bn at the end of March 2013.

The hospitality sector was responsible for the largest growth in order backlog during the quarter with 40.3 per cent, followed by Depa’s yacht-fitting subsidiary Vedder (18.7 per cent), followed in turn by its residential unit (17.9 per cent).

New contract highlights for the quarter included a Dh85m contract for the interior decoration of a 16-floor government tower project in Doha, and a Dh62m contract with National Bank of Abu Dhabi for the interior fit-out and renovation of 25 branches. Both contracts are forecast to last until the middle of next year.

Vedder was awarded two new interior contract projects during the quarter worth a combined total of Dh129m. The contracts consist of an undisclosed full turnkey project, and a kit-out for significant parts of the luxury areas of a yacht interior project, Vedder’s first interior project was secured at Amels in the Netherlands.

Despite rising revenues the company continues to face pressure on its bottom line; this month the company reported an annual loss of Dh143.5m for 2013, attributable to costs from project overruns, and significant impairments and provisions.

“We are encouraged by the solid start to the year both financially and operationally,” said Hasan Ismaik, Depa’s chairman. “Our backlog has also been enhanced on the back of our recent strategic and operational restructuring and the efficiency it has had on our business and bottom line. We remain focused on delivering further restructuring initiatives in the coming period.”

The company has undertaken a series of balance sheet cleaning exercises following the acquisition of a 24 per cent stake in the company by Arabtec in late 2012 for US$65.8m.

Depa’s shares, listed in US dollars on Nasdaq Dubai, closed last week at 64.1 cents. The shares are down 7 per cent since the start of the year.

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