Property News · August 4, 2016

Middle East decline sees Hill International's Q2 net profit fall 66%


Construction management company Hill International reported that net profit in its second quarter shrunk by two-thirds as a result of decline in work from the Middle East.The US-based company, which is set for a showdown with activist shareholder Bulldog Investors at its annual general meeting (AGM) next week, reported a 66.1 per cent decline in second-half profit to US$1.5 million (Dh5.5m), compared with $4.4m in the same period a year earlier. Revenue dropped by 3.3 per cent to $175.6m, which it blamed on a decline in fees from the company’s project management division in the Middle East, which witnessed an $8.6m (14.1 per cent) drop in consulting fees.Net profit for the first six months of the year is down 42.3 per cent to $2.9m on flat revenue of $351.8m.The company’s president and chief executive, David Richter, blamed “the impact that the collapse in oil prices had on new work in our Middle East project management operation”, but said that he expected this dip to be temporary, pointing to $90m of new project wins both in the Middle East and the US so far this year. Its backlog increased by almost 10 per cent to $949m.Bulldog Investors has tabled a motion to remove three of Hill International’s directors, including David Richter’s father, Irvin, who is chairman of its board, which will be voted on by shareholders at next week’s AGM.It has argued that Hill International’s recent financial performance has been poor, and that the company’s corporate governance has been weak, which has resulted in excessive executive pay. It has also been critical of management’s decision to turn down two offers for the company from private equity firm DC Capital Partners — one for $5.50 per share in December, and another for $4.75 per share in May. The company’s shares closed on Wednesday at $4.20 per share.DC Capital’s plan for Hill International involves taking the company private, merging it with its portfolio company Michael Baker International and reducing its exposure to the Middle East. Hill earned 48 per cent of its 2015 revenue of $631m from the region last year.In his correspondence with shareholders ahead of the AGM, David Richter has insisted that the three directors whose positions are under threat — Irvin Richter, Steve Kramer and Gary Maz­zucco – are “absolutely critical” to its success. He also defended its financial position, stating that it has taken $21m of costs out of the business and performed better than many rivals in tough market conditions.mfahy@thenational.aeFollow The National’s Business section on Twitter

Source : thenational.ae
Read more…Middle East decline sees Hill International’s Q2 net profit fall 66%

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