Arabtec eyes Azerbaijan contract
Dubai, March 2, 2010
Dubai contractor Arabtec Holding is bidding for a major property development in Azerbaijan, a magazine reported on Tuesday, the latest effort to expand overseas to weather a downturn in its home market.
Arabtec, which earlier on Tuesday said its board had agreed to raise its stake in UAE-based House of Equipment, is expected to release its full-year results by Wednesday.
London-based magazine Meed reported on its website Arabtec was vying for the contract to build the Crescent - a complex of five high-rise residential and commercial towers and a 360-room five-star hotel on the shores of the Caspian Sea.
US-based engineering and design firm Aecom Technology Corpoation was last year awarded a construction management contract from Gilan Holding on the project, which is expected to be completed by 2013.
Arabtec has been aggressively expanding internationally over the last few months to diversify its portfolio away from Dubai, where property prices have fallen some 50 per cent from their peaks and billions of dollars worth of projects have been cancelled or put on hold.
Arabtec stopped work on one of troubled Dubai developer Nakheel's largest housing projects because it had not been paid by the Dubai World-owned firm, its chief executive said on February 25.
Riad Kamal said no payments had come through from the developer since December's $10 billion cash injection from Abu Dhabi.
The move into Azerbaijan represents Arabtec's latest foray into the former Soviet states. It is working on a $2.7 billion contract to build a 400-metre tower for Russia's Gazprom Neft, the world's biggest gas producer.
The largest UAE contractor by market value posted a 35 per cent fall in net profit for the third quarter. It made Dh511.7 million ($139.4 million) in the first nine months of 2009.
Analysts polled by Reuters have on average forecast a Q4 result of Dh172.43 million, down 6.7 per cent from Dh184.81 million on the year earlier period.
The firm's full-year profit for 2008 was Dh945 million. 'We forecast full year 2009 revenue of Dh8.2 billion and profit (pre-writedowns) of Dh779 million,' said Ian Munro, MAC Capital head of research.
'There is potential for auditors to request that Arabtec takes receivable writedowns of 100 million to 200 million dirhams, which may affect the underlying quality of the result,' he said.
Arabtec will more than double its stake in House of Equipment, which sells, manages, rents and services construction equipment, to 66.7 per cent.
Arabtec this week extended the due diligence to sell a 70 per cent stake to Abu Dhabi's Aabar Investments to April 16. Arabtec's shares were flat at 0803 GMT.-Reuters
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