Galfar Engineering & Contracting Company, Oman's largest contractor by market value, reported a lower-than-expected quarterly profit on Wednesday, leading to its shares closing lower.

The company's profit almost doubled in the first quarter on continued growth in the Gulf Arab state's construction sector.

Net income in the three months to March 31 rose almost 48 per cent to RO7.24 million ($18.81 million), or 0.116 rials per share, compared with 4.90 rials, or 0.078 rials per share in the year-earlier period, Galfar said in a statement on the Omani bourse website.

"Galfar reported profit below the expectations of the market, which was at between 9 million rials and 10 million rials," said Adel Nasr, a broker at United Securities in Muscat.

Galfar shares closed 1.6 per cent lower at 2.18 riyals. Revenues surged 51 per cent to 84.6 million rials in the first quarter.

"Our revenue has increased because the number of contracts has gone up by 50 per cent in 2007," Chief Executive Hans Erlings told Reuters.

"We expect to make bigger revenue in 2008 of up to RO360 million due to a number of new contracts that we expect to implement this year." Erlings declined to give a profit forecast for the year.

In a Reuters survey in March, Amwal Investment forecast the company would post profit of RO6.8 million.

Erlings said Galfar had also won an RO87 million contract to build a sewerage network in the Seeb area earlier this month. The stock is up nearly 50 per cent this year, outperforming the Omani market which has risen 26.3 per cent.-Reuters