Arkan Reports Results For H1 2021

Arkan Building Materials Co. PJSC (ADX: ARKAN) (“Arkan” or “the Group”), a leading construction and building materials company in the UAE, today announced its consolidated financial results for the first half of 2021.

Group revenue was up 7.9% to AED 418.08 million compared to AED 387.42 million in H1 2020, helped by an increase in the sale of clinker to export markets and an increase in dry mortar sales.

Overall, however, the Company recorded a net loss of AED 23.24 million for the first half of 2021, compared to a net profit of AED 2.12 million for the same period in 2020. The drop in profitability was due to the slow construction market, which has continued to be severely impacted by the pandemic, an increase in raw material prices and a reduction in average selling prices. 

Arkan’s management team continues to implement cost saving initiatives to address the market dynamics and improve profitability.  The cost rationalisation programme, which was implemented in Q4 2020, achieved to AED 14 million of cost savings in the first half of 2021.

On 9 May 2021, ADQ’s Senaat announced that it had made an offer to Arkan’s Board to combine the Arkan business with Emirates Steel (ESI).  The proposed merger would create a listed national and regional champion in the building materials and construction sector and a platform for further growth in the UAE and broader GCC region.  The Board of Arkan is recommending Shareholders vote in support of the transaction at the General Meeting, on Monday 9 August 2021.

Commenting, His Excellency Eng. Jamal Salem Al Dhaheri, Chairman of Arkan said: “The construction market in Abu Dhabi continues to be heavily impacted by the pandemic, with project delays resulting in intense market competition. This has been exacerbated by raw material price rises, further squeezing margins.  Recognising the challenges in the local market, our management team continues to drive revenue growth by opening new export markets as well as develop new products, in collaboration with local universities, that address our customers’ evolving requirements.   At the same time, we continue to reduce operating costs, achieving significant savings so far this year.  It is in this market context that the Board is of the strong opinion that the proposed merger with ESI would create a larger building materials business with greater opportunities to grow and innovate, increase market presence and better navigate future market cycles.”