Arabtec Holding Co., the biggest construction company in the United Arab Emirates, said third-quarter profit almost tripled, beating analyst estimates, as revenue was bolstered by new contracts.
Net income jumped to 100.8 million dirhams ($27 million), or 3 fils a share, from 35 million dirhams, or 2 fils, a year earlier, Arabtec said in a statement today. That beat 54 million dirhams, the average of five analyst estimates compiled by Bloomberg.
Arabtec, which helped build the world’s tallest tower in Dubai, said revenue grew to 1.9 billion dirhams from 1.4 billion dirhams in the quarter. The backlog rose 29 percent to 23.5 billion dirhams from a year earlier.
“The huge influx of contract awards is trickling into the revenue,” said Taher Safieddine, an analyst at Shuaa Capital PSC. “They have been doing a decent job at increasing productivity and improving margins.” He rates the stock hold with a price estimate of 2.35 dirhams and is reviewing his rating.
Arabtec said it canceled the second part of a rights issue and will consider alternatives if it needs more funding. The contractor raised 2.4 billion dirhams selling new shares in July to bolster its oil-and-gas construction and affordable housing businesses.
“Our growth strategy will help us achieve our aim of growing Arabtec’s existing business and expanding into higher-margin and higher-growth sectors,” Chief Executive Officer Hasan Ismaik said in the statement.
The contractor is building a branch of the Louvre museum and the Midfield Terminal Building in Abu Dhabi. It will bid for construction of the Guggenheim and Zayed museums in the U.A.E.’s capital. Arabtec is evaluating more than 100 billion dirhams worth of projects mostly in civil engineering, infrastructure and oil and gas, Ismaik told CNBC Arabia in August.
Arabtec’s gross margins widened to 12 percent in the third quarter from 11 percent a year earlier. The contractor is collecting late payments from developers, allowing it to recoup provisional losses taken in 2010 and 2011 after Dubai’s property market crashed, Safieddine said.
Earnings were reported after the close of trading. Arabtec has gained 39 percent in Dubai this year, compared with 73 percent for the Dubai benchmark DFM General Index. The contractor’s shares today closed up 1.2 percent at 2.59 dirhams.