Profit for Burj Khalifa builder Arabtec drops 48% from 2013

Expenses at the contractor that built the Burj Khalifa soared by 75 per cent, but it still eyes expansion in Egypt and Saudi Arabia.

Arabtec shares have dropped from an all-time high of Dh7.40 on May 14 last year to Dh2.62 on Thursday. Ravindranath K / The National

Arabtec full year profit almost halved after expenses ballooned at the UAE’s biggest publicly traded builder.

Net profit for the year fell 48 per cent to Dh241.6m from Dh468.3m in 2013.

The company, in which the Abu Dhabi state fund Aabar Investments has a 36.11 per cent stake, said total revenue surged 46 per cent to Dh8.3 billion.

“The profits were decreased because of the high non-recurring general and administrative expenses,” the contractor said.

Such expenses soared almost 75 per cent to Dh749.9m from a year earlier, the company said without elaborating on how or where they were incurred.

“The company aims to significantly reduce the proportion of the general and administrative expenses to the gross income this year, without affecting its productivity and to enhance the operational efficiency,” it said.

Arabtec rocked markets in June with the sudden resignation of its chief executive, Hassan Ismaik, a vast restructuring process initiated by the new management and a reduction in Aabar’s stake in the Dubai-based builder.

That triggered fears that Arabtec was losing the support of the Abu Dhabi government and sparked a rout that also dragged down the Dubai Financial Market General Index, where its shares are listed.

Aabar has since raised its stake in Arabtec, a sign of government confidence in the company. Nevertheless, Arabtec shares have dropped from an all-time high of Dh7.40 on May 14 last year to Dh2.62 on Thursday.

The contractor said it would focus on growing its operations in Egypt and the Arabian Gulf this year, particularly in Saudi Arabia, concentrating on sectors such oil and gas and electromechanical work, and scouting for acquisitions that “serve its expansion endeavours”.

“We have a strong presence in the local market and have expanded our business in Saudi Arabia, particularly in the specialised construction sectors in oil and gas industries,” said the Arabtec chairman, Khadem Al Qubaisi.

Arabtec reiterated its keenness to finalise an agreement to build one million low-cost homes in Egypt.

The company’s stock fell 0.76 per cent on Thursday to Dh2.62 a share, trading down five consecutive sessions as investors waited for news of progress on the vital project.

Ambitious plans for the US$40bn project spread across 13 sites were announced a year ago with construction originally scheduled to start last year.

“Regarding the one million housing units in Egypt, the company indicated that the project is in progress, confirming that it reached the final stages of signing the contract with the Egyptian authorities,” the company said.

Top Arabtec executives flew to Egypt this month in a bid to get the high-profile project back on track and hopes were high that a deal could be done ahead of a high-profile investment conference in Sharm El Sheikh last weekend attended by leaders from the world of politics and business.

Last week, the Egyptian housing minister Mustafa Madbuli said all problems surrounding the deal had been resolved, while a housing ministry media adviser told Reuters on Monday that a final deal on the project would be signed within 10 days.

Separately, Arabtec’s board recommended a dividend distribution of 5 per cent bonus shares to the shareholders for the financial year 2014, the company said.