Dubai fit-out firm working on Burj Dubai ups contingencies in response to market downturn
Dubai-based fit-out firm Depa, whose contracts include the Burj Dubai, has said that profits in 2008 will be half what it had expected because of the downturn.
The firm, which has a Gulf joint venture with Northern Irish contractor Mivan, said in a trading statement that business was in line with market expectations, with revenue up by a third on 2007's figures.
But the company said it had decided to “increase the level of cautiousness and risk management around existing projects and clients' payments”.
It said it had increased its contingencies for 2008 by 250% above normal – which usually stands at around $8m (£5.6m).
As a result, Depa said the net profit growth would be revised down from 40% to 20-22% when it publishes its 2008 results at the end of March. It added: “These contingencies are not allocated or related to any risk other than the current market.”
The firm is carrying out work on a host of schemes, including the Burj Dubai, which will be the world's tallest tower at 818m tall when it opens in September.
Despite the hike in contingencies, Depa said it expects revenue and profit growth to climb 30-35% in the next year and forecasts further growth in 2010. Underlining its optimistic mood, the company said it has received orders for work in a string of countries – including Morocco, Egypt and the UAE – carrying a value of $286m (£201m) in the first quarter of 2009.
Depa formed its joint venture with Mivan in 2005 and at the end last year the Northern Irish firm said it was expanding into Abu Dhabi and Bahrain to counter the slowdown in Dubai.