Depa Limited, the Nasdaq Dubai-listed interior contracting firm, has reported a 44 per cent fall in net profit for the first half of the year.
Hit by cost revisions on a few major projects and additional extra costs incurred from delays, the company’s net income fell from AED27 million in 2014 to AED15m this year, it said in a statement to the stock exchange.
Revenue also declined by four per cent to AED841m in the same period due to a lower backlog at the start of this year, which, the company says, was a result of its more selective approach in bidding for contracts.
Gross margins slipped to ten per cent of revenue, down from 13 per cent in the first half of last year.
“The first half of 2015 has witnessed Depa continuing to implement its strategy of geographical diversification and operational consolidation, creating a secure base for sustainable long-term growth. We are encouraged by our performance in mature European and Far Eastern markets, as well as our progress in emerging and frontier 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,” says Nadim Akhras, Group CEO, Depa.
In the first six months of this year, the company completed work on 37 contracts, including hospitality projects for Hyatt, Novotel, Sheraton and Ritz-Carlton hotels. It also finished retail fit-outs for Dior, Louis Vuitton, D&G, Michael Kors and Pottery Barn.
“While maintaining a cautious approach to signing new contracts, Depa’s backlog increased during the first six months of 2015 as we won a number of high-quality projects across a range of geographies. 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,” adds Akhras.