{"id":17940,"date":"2016-06-28T23:34:30","date_gmt":"2016-06-28T16:34:30","guid":{"rendered":"http:\/\/www.siamlandbank.com\/propertynews\/?p=17940"},"modified":"2016-06-28T21:46:56","modified_gmt":"2016-06-28T14:46:56","slug":"market-analysis-gulf-contractors-feel-the-squeeze","status":"publish","type":"post","link":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/market-analysis-gulf-contractors-feel-the-squeeze\/","title":{"rendered":"Market analysis: Gulf contractors feel the squeeze"},"content":{"rendered":"


\nThe region’s listed contractors are expected to post another poor quarter of results as companies have to contend with a lack of new project awards, declining revenue and shrinking margins.An analysts’ note from EFG Hermes says that company disclosures on contract wins show a 75 per cent year-on-year decline in new awards for the companies it covers, and that 70 per cent of the deals that were awarded in the past three months by value have gone to Egypt’s Orascom Construction.It said that three companies – Arabtec, Al Khodari and Drake & Scull – had reported “close to nil” new awards over the past three months, and that revenue across the board was likely to be lower, with companies exposed to the Saudi market set for the steepest declines as payment issues continue to affect the market. EFG Hermes’s analysts forecast a 13 per cent revenue decline for Dammam-based Al Khodari and a 22 per cent drop for Dubai-based Drake & Scull.On Monday, Al Khodari said that it would book a multimillion riyal loss after gaining permission to reassign a contract with Taif Municipality worth almost 144 million Saudi riyals (Dh141m).The company said it had gained approval from the municipality to reassign the work to Moenes Mohamad Al Shayeb Civil Works as part of its plan to deal with issues caused by labour market reforms and to reduce its reliance on government projects. It expects to book a loss of 19.4m riyals on the contract. EFG Hermes also expects Arabtec, Drake & Scull, Al Khodari and Kuwait’s Combined Group Contracting to post net losses during the quarter. It forecasts a Dh83.2 million quarterly loss for Arabtec, which would be its seventh straight loss-making quarter. Earlier this month, Arabtec said it would approach banks and shareholders for talks about improving its capital structure. Shareholders also approved a plan to transfer Dh1 billion from its reserves to wipe out accumulated losses, which stood at Dh2.27bn by the end of the first quarter.EFG Hermes analysts also said that Drake & Scull’s appointment of a new chief financial officer and chief operating officer “may trigger another round of provisioning and balance sheet clean-up” when it announces its results and that short-term financing may need to grow. It predicts that the company’s net debt could edge up to Dh2.1bn – a 24 per cent year-on-year increase.Contractors throughout the industry have suffered from cash-flow constraints as many government clients – particularly in Saudi Arabia – withhold payments as revenue decline due to lower oil prices.A recent study by the consultants PwC on the effect of lower oil prices on the sector found that 80 per cent of respondents expect to experience funding restrictions in the near future, and that one third said they felt tighter funding would have a “severe” effect on projects.Chris Scudamore, who leads PwC’s capital projects and infrastructure team in the Middle East, said that contractors need to make sure they maintain strong relationships with lenders.”If you’re a contractor who has certain loans or finance in place, if things start to come under pressure, the first conversations you need to be having are with your bank about your credit facility.”Speaking at the recent Meed Construction Leadership Summit in Dubai, Samer Khoury, the executive chairman of Consolidated Contractors Company, said that funding for contractors was still available, but only for certain purposes.”As long as you ask for finance for projects, you can get it,” he said. “If you want to get it for the corporation, it will be more tough.”mfahy@thenational.aeFollow The National’s Business section on Twitter
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\nSource : thenational.ae
\nRead more…Market analysis: Gulf contractors feel the squeeze<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The region’s listed contractors are expected to post another poor quarter of results as companies...<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[1],"tags":[],"class_list":["post-17940","post","type-post","status-publish","format-standard","hentry","category-property-news"],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p75ss1-4Fm","jetpack-related-posts":[{"id":23849,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/orascom-second-quarter-profit-slides\/","url_meta":{"origin":17940,"position":0},"title":"Orascom second-quarter profit slides","date":"August 24, 2016","format":false,"excerpt":"\r Orascom Construction reported a 22 per cent year-on-year decline in second-quarter pro\u00adfit amid a tough Saudi market, the Egypt-based contractor said on Wednesday.Net profit plunged to US$26.4 million from $34m a year earlier, the company said.Revenue remained largely flat at just over $1 billion. Orascom, whose shares are listed\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":18178,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/expo-2020-projects-set-to-provide-timely-relief-for-dubais-contractors\/","url_meta":{"origin":17940,"position":1},"title":"Expo 2020 projects set to provide timely relief for Dubai's contractors","date":"June 30, 2016","format":false,"excerpt":"\r The award of the Dubai Metro extension contract is expected to be followed by a flurry of Expo 2020 contracts, providing much-needed relief for battered builders.The award of the Dh10.6 billion order comes as other major projects related to the expo also move forward. Reem Al Hashimy, the Minister\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":26880,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/dubai-property-set-for-return-to-growth-next-year-says-knight-frank\/","url_meta":{"origin":17940,"position":2},"title":"Dubai property set for return to growth next year, says Knight Frank","date":"September 22, 2016","format":false,"excerpt":"\r Dubai's residential property market is heading for a \"soft landing\", with a flattening of prices expected for the remainder of this year ahead of a likely increase next year, according to Knight Frank.The property consultancy's latest Inside View report released yesterday states that after \"a period of restraint\" caused\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":129022,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/al-ansari-said-to-pick-efg-hermes-emirates-nbd-to-lead-dubai-ipo\/","url_meta":{"origin":17940,"position":3},"title":"Al Ansari said to pick EFG-Hermes, Emirates NBD to lead Dubai IPO","date":"August 22, 2022","format":false,"excerpt":"\r When it happens, Al Ansari follows a spate of companies staging IPOs in Dubai and the wider Arabian Gulf. Recent IPOs in the UAE include those of TECOM Group and Union Coop\r \r Source : arabianbusiness.com\r Read more...Al Ansari said to pick EFG-Hermes, Emirates NBD to lead Dubai IPO","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"https:\/\/i1.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2022\/08\/zR9bHbmt-al-ansari-exchange-1.jpg?fit=860%2C621&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":6704,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/arabtec-shares-record-best-week-in-more-than-seven-years\/","url_meta":{"origin":17940,"position":4},"title":"Arabtec shares record best week in more than seven years","date":"March 3, 2016","format":false,"excerpt":"\r \r Arabtec shares rebounded on Thursday, capping the stock's best week in more than seven years.The construction firm's shares, which plummeted 20 per cent on Wednesday afternoon following a \"sell\" note from EFG Hermes, rose by as much as 11 per cent, before settling 8 per cent higher at\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6544,"url":"https:\/\/www.siamlandbank.com\/propertynews\/property-news\/arabtec-share-surge-driven-purely-by-rumours-as-recommendation-is-to-sell\/","url_meta":{"origin":17940,"position":5},"title":"Arabtec share surge 'driven purely by rumours' as recommendation is to sell","date":"March 2, 2016","format":false,"excerpt":"\r \r Arabtec's shares extended gains for a fourth consecutive day on Wednesday morning, opening up 6 per cent, even as the stock was downgraded to sell by EFG Hermes.EFG said that this week's rally in Arabtec shares, which have increased in value by more than 50 per cent since\u2026","rel":"","context":"In "Property News"","img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/17940"}],"collection":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/comments?post=17940"}],"version-history":[{"count":0,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/posts\/17940\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/media?parent=17940"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/categories?post=17940"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.siamlandbank.com\/propertynews\/wp-json\/wp\/v2\/tags?post=17940"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}