Depa narrows first quarter net loss
Dubai, May 22, 2012
Dubai-based interior contractor Depa said its net loss for the first quarter of 2012 has narrowed to Dh8.7 million ($2.36 million) from last year's loss of Dh19.3 million thanks to an impressive order backlog.
Announcing the Q1 results, Depa said the contract income soared 15.5 per cent to Dh378.1 million compared to Dh327.2 million the year before. The gross profit margin was 10.9 per cent as the business started to see a return to more normal margin levels following the resumption of new project work which clients had held due to the economic downturn.
On its net loss, Depa said it was an improvement on prior year results as they reflect the seasonal cyclicality in earnings which are heavily weighted to the second half of the year.
This seasonal cyclicality is caused by a combination of factors related to the tendency of project completions to be tied to the end of the fiscal year and work on projects accelerating towards the end of the fiscal year.
Commenting on the results, CEO Mohannad Sweid said Depa’s backlog continued to remain at record levels and as of March 31 this year the order stood at Dh3.9 billion, compared to Dh3.8 billion in the last quarter and Dh2.3 billion in the first quarter last year.
This record backlog reflects just under Dh500 million of new contracts signed during the first quarter, he pointed out.
'We continue to sign sizeable contracts with established names across the GCC and in South East Asia and we anticipate increasing our backlog, already at record levels, during the year,' remarked Sweid.
'The macro-economic environment has improved considerably and we are witnessing an increase in activities from both public and private sector clients. This, together with the actions we took to diversify and streamline the business will position Depa well for future market recovery,' he said.
Depa’s success in winning new business can be attributed to action taken in recent years to address uncertain markets by diversifying its business both by geography and by sector, said the company chief.
In addition the company also streamlined areas of its operations to ensure it was more flexible in moving resources to fulfil projects and bringing the right skills to bear in different locations, he noted.
According to Sweid, Depa’s balance sheet remained strong with its total assets soaring to Dh3.05 billion.
'Its cash and bank balance reached Dh389.6 million up from Dh332.3 million at the end of 2011 reflecting strong cash generation of Dh74.5 million during the period and reducing trade receivables,' he added.-TradeArabia News Service