Depa profit rises 7% in the first quarter

Nasdaq Dubai-listed Depa yesterday said that its profits in the first quarter were largely driven by its Asian and European subsidiaries and improving margins in the region.

The interior contracting company, which is 24 per cent owned by the contractor Arabtec, reported a 7 per cent increase in net profit to Dh15 million from a year earlier. Revenue fell 5 per cent to Dh440m.

“Since last year Depa has been very selective in signing new contracts and focused on low risk and profitable work only,” said Umar Saleem, the chief financial officer at Depa. “The result was a decrease in revenue and backlog but significant improvement in gross margins and net profit.”

The company will continue the strategy this year, he said.

It sits on Dh135m in net cash at the end of the first quarter, up from Dh14m in the same period last year. The company attributed the increase to “timely certifications and aggressive collection of receivables” in a statement filed on Dubai Nasdaq.

Among its best performing units are Singapore-based Design Studio Furniture Manufacturer, which generated Dh134m in revenue; Vedder, the German luxury yacht interior design company it acquired in 2008, contributed Dh97m in revenue; and Dubai-based Deco Emirates, which reported revenue of Dh23m.

The stock, which does little trade, was unchanged on the news at 50 cents. That was down from 65 cents a year ago.

The company’s total order backlog fell to Dh2 billion, down from Dh2.5bn at the end of the first quarter last year. More than half of this , or 54 per cent, came from the hospitality sector, which accounted for Dh1.05bn worth of orders.

“Last year we had many projects in the infrastructure sector, therefore the share of the hospitality sector [backlog] was [lower last year],” Mr Saleem said.

To mitigate the risk of the slowdown in the construction industry, including that of the hospitality sector, it has developed a presence in Asia and Europe, Mr Saleem said.

Depa hospitality projects include Emerald Palace, Kempinski Hotel on the Palm, Madinat Jumeirah Dubai, and Swissotel Merchant Court in Singapore.

The yacht and residential sectors followed next in the order backlog, with 15 per cent each.

Residential unit sales in Dubai are expected to decline between 1 and 5 per cent in the first half before stabilising later in the year, according to Deloitte.

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