Dubai - Arabtec this morning confirmed reports of job losses in a statement posted on the Dubai Financial Market’s website, The company denied that job losses ran into the hundreds, but did not specify the number of firings.
“Arabtec has carried out some internal procedures with a view to improving productivity and reducing expenditures, to enhance the performance of the Company and move forward with its plans for growth and development,” the statement said.
“These actions included termination of a limited number of staff. The Company is committed to the principles of full disclosure and and transparency...indicating that all decisions taken...are aimed at the protection of the rights of shareholders and investors.”
The National Bank of Abu Dhabi has withdrawn its guidance for the stock, and today published a note saying that it was reviewing its target price and rating.
“The uncertainty surrounding the company’s direction amid the change in top management leads us to put our target price and rating under review,” the note said.
NBAD said that the departure of Arabtec’s head of M&A suggested that the company was no longer ambitious to develop “into a global top 10 construction and civil engineering company by revenue by 2018.”
The firings also presented downside risks to the company’s outlook, the note said.
“In the short term, a high level of redundancies could trigger sizeable restructuring costs and lead to downward revision in forecasts.”
The company’s shares hit a low of Dh3.12 just after opening – a decline of 9.8 per cent versus the previous evening’s close, before climbing to Dh3.17 after an hour of trading.
Arabtec’s shares are expected to drop further to Dh2.27 – 28 per cent below their current price – according to a consensus estimate of equity analysts following the stock.
The company’s shares have shed 59 per cent of their value since their May peak, following a decision by major shareholder Aabar to cut its stake, and last week’s resignation of chief executive Hasan Ismaik.
Source: The National
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