Galfar Engineering and Contracting, one of Oman’s top construction contractors, has declared an order book worth $1.2bn (OMR471m) for H1 2018, despite reporting a year-on-year (YoY) decline in revenue and operating profit for the period.
The company’s revenue dropped from $376.9m (OMR145.1m) in H1 2017 to $340.8m (OMR131.2m) in the first half of this year.
Galfar’s operating profit declined by $5.5m (OMR2.1m) from H1 2017, totalling $7.5m (OMR2.9m) this year. However, its profit after tax recorded a significant improvement, rising from H1 2017’s $1.1m (OMR399,000) to $6.2m (OMR2.4m) in H1 2018.
In a statement, Galfar said it had “performed well” in all its key focus areas, “despite facing delays in bidding and award” processes.
Fresh orders worth $197.4m (OMR76m) were recorded by the firm in the first half of this year, in addition to extension and variation awards worth $109.1 (OMR42m). Galfar said its billion-dollar order book provides “good revenue visibility” for the rest of 2018.
One of Galfar’s major wins in H1 2018 was British Petroleum’s Khazzan Gas Gathering System project, worth $91m (OMR35m).
The Galfar group’s subsidiaries and associate in Oman and Kuwait have reported an unchanged combined profit of $1.8m (OMR700,000). Its India businesses suffered in H1, however, noting a combined loss of $5.7m (OMR2.2m) – double the corresponding 2017 figure. This occurred due to funding constraints that “delayed […] construction activity”, Galfar said.
In a statement, Majid Salim Said Al Fannah Al Araimi, chairman of Galfar Engineering and Contracting, said the company is continuing “to pursue international business opportunities in select geographies with a view to diversify geographical concentration risk”.
Commenting in a missive issued to the Muscat bourse, Al Araimi added: “[Galfar] has successfully registered its operations in Kuwait during the period in its pursuit of huge opportunities prevailing in that region on the infrastructure front.
“[Oman’s] government is actively promoting PPP [public-private partnership] projects. This is giving rise to large business opportunities [that] the company is well positioned to exploit.”
This July, Galfar won $6.8m (OMR2.6m) in an arbitration case against Haya Water, a state-owned company that is part of Oman Wastewater Services Company.
The arbitration case was brought before the Omani courts due to a dispute between the contractor and the client over an undisclosed issue related to the construction of the Al Ansab Sewage Treatment Plant, which was completed more than a decade ago in 2004, Galfar said.
Defendant Haya Water has been ordered to refund $5.3m (OMR2m) to Galfar, pay all of the contractor's legal fees, and pay the claimant $1.4m (OMR558,535) in accumulated interested backdated from 8 May, 2004.
In the same month, Dr Hans Erlings, chief executive officer of the Muscat-listed company, said Galfar had registered “a one-person company” in the country. Galfar Oman General Contracting for Building is fully owned by Galfar, and has an initial capital of $33,030 (KWD10,000).
“This new company will apply to be registered for executing the same works [that Galfar] is registered for in Oman,” Erlings said.
“The associate company in Kuwait, Galfar Engineering and Contracting-Kuwait (K SCC), in which Galfar Oman holds 26%, will continue operating in roads, civil works, and the supply of concrete and asphalt,” he added.
Galfar’s expansion in Kuwait came after it confirmed late last year that it was exploring the divestment of its Indian business. The contractor’s Indian presence included its fully owned subsidiary, Galfar Engineering and Contracting India, and five special purpose vehicles (SPVs) created for road projects.