Red Sea Housing Services says the opening of its new US$22.7 million factory at King Abdullah Economic City will be delayed until the second quarter of next year because construction work has slipped further behind schedule.
The Saudi-listed company, which builds modular housing and sells them as worker camps or affordable housing units, initially signed a deal for a 20-year lease on the site.
The site is within the 63 million square metre industrial zone near the newly created Red Sea port.
The company had expected the factory’s completion by the third quarter of last year, but it was delayed by the Economic Cities Authority’s changes to the design and specifications of the workers’ camp.
The authority has oversight of the development of Saudi Arabia’s four new economic cities.
Last week, Red Sea said work was being delayed yet again because of the “numerous changes” to designs to meet the requirements of the authority and the city’s master developer, Emaar, The Economic City.
The company also blamed “changes in certain economic conditions” after posting a 44 per cent fall in first-half earnings to Dh46m. For the past quarter, earnings dived 58 per cent to Dh16.6m on a 14 per cent drop in revenue.
It attributed that to a 24 per cent slump in building revenue and weaker margins arising from pricing pressure.
Red Sea said about a quarter of the work on the factory, including the infrastructure and construction of the boundary walls, was now complete. It has spent about Dh6.4m on the project.
Emaar, The Economic City last week posted a 41 per cent decline in second-quarter earnings to Dh49.3m from the first quarter, citing an exceptional impairment charge and increased marketing costs.
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