Arabtec Q1 profit down 17pct as revenue shrinks

Arabtec, the United Arab Emirates largest builder by market value, posted forecast-lagging quarterly profits in the wake of Dubai's property market crisis, although the sector outlook was rosier, said an analyst.

Arabtec posted a 17 per cent slide in net attributable profit to Dh134.5 million ($36.63m) in the first three months of 2010, it said in a statement on Monday, compared with a profit of Dh161.2m in the same period last year.

The profit excludes an unrealised loss of Dh1.7m for the revaluation of available-for-sale financial assets during the period.

A Reuters poll of four analysts expected Arabtec to post net profit of Dh178.9m for the period.

Executives at the firm were not immediately available for comment, although one regional analyst was more positive on the outlook for the company.

"The key reason [for the loss] was the sector-wide construction standstill between the two Dubai World statements in November and March," said Roy Cherry, vice president, research, at Shuaa Capital.

"We believe we will see weak results from other construction companies too as a result, however we expect Arabtec and other construction firms to be able to compensate for the shortfall in the coming three quarters."

The firm's shares were up 0.8 per cent at Dh2.48 a share at 0608 GMT, in line with Dubai's bourse which also rose 0.8 per cent.

Arabtec said its board approved setting up Arabtec Egypt in partnership with Amer Group and discussed proposed investment opportunities in Pakistan.

It also approved increasing the capital of its unit Target Engineering Construction to Dh150m from Dh70m.

In April Arabtec and Aabar Investments called off their $1.7bn agreement for Aabar to take over Arabtec, with analysts saying Arabtec no longer needed it with Dubai's debt repayment plan.

In April, Arabtec said it accepted Nakheel's debt repayment offer of cash and new debt.

Property prices have been under pressure since late last year, when the financial crisis and a slump in oil prices ended a six-year economic boom in the Gulf region.

The builder reported its first ever quarterly loss in the fourth quarter after a charge of about $80m for bad debt.

Earlier in April, HSBC cut Arabtec to "underweight" from "neutral".