Shares in Arabtec fell to their lowest price in more than 14 months on Sunday as investors reacted to the company’s surprise fourth-quarter loss.
The UAE’s largest listed contractor startled the market by revealing a Dh94.4 million loss for the final three months of 2014, compared with a Dh122.1m profit the same period a year prior, sending shares plummeting 9.92 per cent in trading to close at Dh2.36 each.
The shares of the Burj Khalifa builder are at their lowest level since 15 January 2014 – dropping below even their June low in the aftermath of the departure of the former chief executive Hasan Ismaik.
Net profit for the year fell more than 48 per cent to Dh241.6m from Dh468.3m in 2013 as general and administrative expenses ballooned almost 75 per cent to Dh749.9m from a year earlier as Mr Ismaik guided the company through an ambitious expansion drive at the beginning of last year.
In a statement to the market, Arabtec said that its board of directors had “expressed dissatisfaction” with the increase in expenses which it said “prompted the board to intervene at the right time in June last year and instruct the carrying out of a restructuring process to curb the unnecessary expenses that do not achieve positive returns”.
However, analysts said that many of the expenses are likely to have arisen from a spate of redundancies following a companywide restructuring after Mr Ismaik’s departure last summer, and will have been exacerbated by lower building margins in Saudi Arabia and the UAE.
“Arabtec has been seeing bad results for at least the last three quarters but the thing about these results is that profits turned negative for the first time,” said Allen Sandeep, director for research at Naeem Brokerage. “The results were worse than we were expecting and below market consensus, which was reflected in the share price fall.”
The company, in which the Abu Dhabi fund Aabar Investments has a 36.11 per cent stake, was the biggest faller on the Dubai Financial Market General Index. The index declined 1.37 per cent.