Abu Dhabi National Company for Building Materials is rebuilding its way to a profitable future.
The company, better known as Bildco, has reshuffled its management team and as part of a new strategy opened a new concrete block factory, and a steel mill is on the way.
The company had endured an awful run of results in recent years, with turnover slumping to Dh25.3 million in 2014 from a peak of Dh1.5 billion in 2008.
However, results filed earlier this week show that revenue more than tripled last year, to Dh95.1m. Although it declared a loss of Dh20.1m, this was largely as a result of the Dh16m lost through trading in securities. Bildco has a Dh400m portfolio, invested mainly in UAE stocks.
The company’s accounts manager, Rajesh Chopra, said that the uplift in sales came following the appointment of Pramod Choudhary as its general manager in October 2014, as well as the recruitment of Sultan Saeed as head of business development.
Mr Chopra said the new management had implemented a more flexible pricing strategy, which led to a 40 per cent increase in sales at its existing block factory in Mussaffah. “We changed the pricing policy. We tried to achieve full capacity by selling at anything above the variable costs, so that we get more contributions to reduce our fixed costs,” Mr Chopra said.
A steel trading business, which had largely been dormant in previous years, also began trading again, but only sold to customers for cash at spot prices, avoiding fluctuations in steel prices.
Bildco also opened a new factory producing aerated concrete blocks in Dubai in March last year. During its first few months of trading, the factory only operated at 20 to 30 per cent of its production capacity of 300,000 cubic metres per year as it awaited approvals and export certificates. In the first two months of this year, this has increased to 60 per cent.
Mr Chopra said he expects a significantly higher contribution from the factory to this year’s revenue.
Bildco is also finalising a deal with a joint venture partner for a steel manufacturing mill at ICAD. The site and the machinery have already been acquired, and once the joint venture is agreed it will take 18 months to build, potentially opening by the end of next year.
Meanwhile, Dubai-based Conares Steel has started installation work at its new steel pipe mill in the Jebel Ali Free Zone, which will cost between US$25m and $30m to complete.
The plant will produce steel pipes from 4 to 12 inches in diameter for use in infrastructure projects and will take the company’s annual steel production to more than 1 million tonnes when it opens later this year.
Bharat Bhatia, the chief executive of Conares, said that the UAE’s steel market would rebound this year and is set to grow at 10 per cent a year from next year.
“Prices have dropped but demand has not reduced,” said Mr Bhatia. “From the steel industry standpoint, local manufacturers will be in a strong position to cater to upcoming projects.”
The most recent Statistics Centre Abu Dhabi figures show that the price of steel fell by 4.7 per cent in January and was 24.9 per cent lower year-on-year.