Depa lost Dh22 million in the June to September period compared with a profit of Dh19m during the same period last year. Delores Johnson / The National
Depa lost Dh22 million in the June to September period compared with a profit of Dh19m during the same period last year. Delores Johnson / The National

Dubai’s Depa to cut jobs as it seeks to trim costs



Dubai’s Depa will cut jobs as it embarks on a restructuring after posting a loss for the third quarter. The fit-out contractor lost Dh22 million in the June to September period compared with a profit of Dh19m a year earlier. Third-quarter revenue also declined by 32 per cent year-on-year to Dh347m.

“Times are tough,” said Umar Saleem, the chief financial officer. “We are consolidating all of our contracting operations in the Middle East under our flagship company, Depa Interiors.”

He said the company had previously decentralised operations by building teams of estimators, designers and project managers in markets such as Saudi Arabia, Qatar and Abu Dhabi, but these will now be scaled back. This work will be carried out from Dubai with a skeleton staff maintained in each market.

He added that it was too early to say how many jobs would be affected, but said the restructuring would complete “by the end of this year or early next year”.

“We’re removing different layers within the organisation because within the next couple of years you will have to be very lean and mean in your operations.”

The loss was blamed on the worsening state of the construction market, which is causing delays and payment issues.

“The moment projects stretch out beyond their standard duration, then you have prolongation costs kick in, you have unapproved variations, et cetera,” said Mr Saleem.

“So although you’ve incurred the costs and you are going to get the money from the client once it gets approved, you cannot book the revenue.”

He added that it had also continued its strategy of targeting work “with good paymasters, good main contractors and clients that do not have any financing problems”.

Despite the fall in revenue, Mr Saleem said Depa had done well in terms of new contract awards, with its backlog increasing to Dh2.3 billion by the end of September, compared with Dh2.1bn at the start of the year.

Awards so far in 2015 include the fit-outs of the W Hotel Dubai and Kempinski Hotel Palm Jumeirah, while its German subsidiary Vedder has just picked up a €15m (Dh58.4m) order for a new luxury yacht fit-out.

“Our factories in Germany are fully sold out until 2017 from a capacity standpoint,” said Mr Saleem.

Colin Timmons, the general manager of Abu Dhabi’s Al Fara’a Contracting, said 2016 “is going to be tough” for contractors in the UAE, especially for larger firms as they incur bigger overheads through making sure health and safety standards are properly implemented, and that workers are provided with good standards of accommodation and transport.

“From the largest to the smaller contractors there’s a huge range in terms of the contractor capabilities, but the client only seeks to achieve the cheapest price. It’s very difficult for larger contracting entities to compete with smaller businesses in the UAE,” he said.

mfahy@thenational.ae

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COMPANY PROFILE

Company: Bidzi

● Started: 2024

● Founders: Akshay Dosaj and Asif Rashid

● Based: Dubai, UAE

● Industry: M&A

● Funding size: Bootstrapped

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Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

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Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4

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