Depa reports a 44% decline in H1 profit as projects hit by delays

The Dubai-based fit-out contractor Depa revealed a 44 per cent drop in net profit for the first half of the year to Dh15 million.

Revenue also fell back by 4 per cent to Dh841m in the same period.

The company blamed the lower profit figure on cost revisions on a few major projects, as well as extra costs incurred as a result of delays. Gross margins slipped to 10 per cent of revenue, down from 13 per cent in the first half of last year.

The decline in sales was due to a lower backlog at the start of last year, which the firm said had been due to its more selective approach in bidding for contracts. It added, however, that its project pipeline has since been replenished “with a number of high-quality contract wins”.

Although its backlog at Dh2.32 billion is 3 per cent lower than at the same time 12 months ago, it is almost 12 per cent higher than at the start of 2015.

Group chief executive Nadim Akhras said the company had been encouraged by its performance both in mature European and Far Eastern markets, as well as in emerging markets in Africa and South Asia.

“Following several challenging years for the industry in our core UAE market, we are also cautiously optimistic about the recent pick-up in fit-out activity, which we anticipate will continue in the second half of the year,” he said

“Despite global economic issues that had a negative impact on several of our key markets, the work we have done to further streamline and diversify the business in recent years leaves Depa well positioned over the coming period.” 

The company finished work on 37 new projects during the first half of the year, including hospitality projects for Hyatt, Novotel, Sheraton and Ritz Carlton hotels. It also completed retail fit-outs for Dior, Louis Vuitton, D&G, Michael Kors and Pottery Barn.

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