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UAE’s Arabtec swings to profit; delays rights issue
Q4 net profit 54.7 million dirhams - Reuters calculated; Full-year net profit 307.1 mln dirhams; Postpones rights issue, convertible bonds; Shares up 7.9 percent.
March 9, 2011 4:09 by Reuters
Dubai contractor Arabtec swung to profit in the fourth quarter and shelved plans for a rights issue and $150 million convertible bond while market conditions are unfavourable.
Shares in Arabtec, the largest builder in the United Arab Emirates by market value, had surged 7.9 percent to 1.36 dirhams by 0840 GMT, while Dubai’s benchmark index was up 1.9 percent.
Arabtec had planned a rights issue of 398.67 million shares.
“This is the right move, rather than pushing it through when risk appetite is low, especially among foreign investors,” said Jad Abbas, EFG-Hermes real estate analyst. Unrest that toppled leaders in Tunisia and Egypt and sparked insurrection in Libya has prompted foreign investors to pull funds out of Gulf markets, fearing contagion.
“Arabtec doesn’t need the money urgently and it can wait for the political environment and the general market conditions to improve before deploying any raised cash into non-UAE markets,” said Abbas.
Arabtec’s fourth-quarter net profit surged to 54.7 million dirhams ($14.9 million), Reuters calculated, based on the full-year earnings, compared with a net loss of 16.81 million dirhams in the year-earlier period.
Its full-year net profit for 2010 was 307.1 million dirhams, down 38 percent from a year earlier, it said in a statement to the Dubai bourse.
The company said net revenues for 2010 were 5.46 billion dirhams.
It also announced a distribution of 25 percent of bonus shares to its shareholders.
Arabtec is expanding overseas to diversify away from Dubai’s once-booming property sector, which has been blighted by over-supply and a lack of demand, with developers slowing or cancelling projects.
The builder won a 900 million dirham contract to build part of a university complex in Kuwait. It also landed contracts worth 356 million dirhams ($97 million) to build an underground car park in Abu Dhabi and residential villas in Egypt in January. (By Praveen Menon. Additional reporting by Matt Smith; Editing by Will Waterman) ($1=3.67)