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Al-Khodari mulls doubling capital spending

Al-Khodari mulls doubling capital spending
Al Khodari
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Saudi Arabia’s construction firm Abdullah Abdul Mohsin Al-Khodari and Sons says it may double its capital spending in coming years to cope with the work it hopes to do on the country’s big infrastructure projects, according to Arab News.

“Most of these projects will go into the tens of billions of riyals,” the construction firm’s CEO Fawwaz Al-Khodari said in an interview for the Reuters Middle East Investment Summit.

“The scope relevant to Al-Khodari in each of these projects could easily reach 7 or 8 billion. I am not necessarily saying that is what Al-Khodari would capture, but that’s the potential of any one project...

“So when Al-Khodari gets its share, it will have a substantial and material impact on financials, and ultimately a positive impact on the bottom line.”

Such projects will require raising annual capital expenditure above the levels of SAR150 million to SAR250 million seen in past years, Al-Khodari said.

“From one project alone Al-Khodari could double its capex — so the trend upwards in capex is a fair assumption.

The company reported a 23 % year-on-year rise in third-quarter net profit to SAR15 million, as its contract backlog fell to SAR3.36 billion as of Sept. 30 from SAR3.99 billion a year earlier.

Al-Khodari said Saudi government spending on projects was only likely to drop if oil prices slumped for at least two years.

Al-Khodari reported net earnings of nearly SAR 15 million for Q3 2014, rising 23.08% year-on-year from SAR 12.2 million and 89.69% quarter-on-quarter from approx. SAR 7.9 million.

The nine-month net earnings neared SAR 55.5 million, with a decrease of 0.56% compared with SAR 55.9 million in the year-ago period.

The earnings per share stabilized at SAR 1.05.

The company ascribed the increase in Q3 earnings y/y to: 1- Growth in revenue by 5.6%; 2- Reduction in G&A costs by SAR 4.6 million (22.1%); 3- Reduction in selling and marketing cost by SAR 2.0 million (42.0%) 4- the increase in other income by SAR 1.8 million.