Dubai's Arabtec Q2 net profit plunges 74pc

DUBAI: Dubai builder Arabtec's second quarter net profit fell 74 percent, missing analysts' forecasts as the firm's general and administrative expenses almost doubled.

The largest builder in the United Arab Emirates by market value made a net profit of 28.9 million dirhams ($7.9 million), compared with a net profit of 111.1 million in the same period last year, it said in a statement on Dubai's bourse website on Sunday.

Analysts polled by Reuters on average expected the company to report a net profit of 39.63 million dirhams.

Arabtec's shares slumped 5.6 percent at 0829 GMT as part of a regional stock market sell-off as investors reacted to Friday's US ratings downgrade by S&P. Dubai's index fell 4.1 percent.

Revenue for the three-month period ending June 30 was 1.22 billion dirhams down slightly from 1.28 billion dirhams in the same period last year, the statement showed.

General and administrative expenses jumped to 94.1 million dirhams from 49.2 million dirhams, the statement said while finance costs showed a loss of 793,000 dirhams compared to a profit of 5.42 million dirhams in the second quarter of 2010.

"The key reason why we expected numbers to remain widely in line with the first quarter is simply the fact that Arabtec's major projects have yet to commence," said Roy Cherry, real estate analyst at Shuaa Capital.

Cherry added that earnings in the second half of the year should be boosted by the expected start of a major Saudi project before year end.

Arabtec made a net profit of 26.6 million dirhams in the first quarter.

Arabtec is looking to eventually more-than-double its workforce to 25,000 in Saudi Arabia as it continues to shift its focus to other markets following a real estate collapse in Dubai, it said in June. The builder said then that it expects to maintain its current backlog of projects worth around 15 billion dirhams in all of its markets by the end of the year.

Copyright Reuters, 2011