Galfar Engineering & Contracting Company returned to profit in the first half of this year after six straight years of losses as the company’s new turnaround plan, which was adopted earlier this year, shows signs of progress.
The sultanate’s largest construction and contracting firm reported a net profit of RO2.62mn for the six months period ended June 30, 2021 compared to the net loss of RO11.04mn for the same period of 2020.
‘This improved performance is on account of various initiatives taken by the company as part of its turnaround strategy especially restructuring and re-organisation and the implementation of stringent cost control measures,’ Galfar said in its financial report submitted to the Muscat Stock Exchange on Sunday.
The positive bottomline results, as per the company, came despite a 6 per cent drop in revenues compared to the same period in 2020 as a result of reduced scope of works and cash flow constraints.
‘As part of the turnaround strategy, the ongoing measures to control manpower and overhead expenses, and improve efficiencies in project execution have contributed to reducing overall cash outflow and improve the operating financial results in 2021,’ Galfar said.
At the group level, Galfar’s consolidated net profit came at RO1.36mn for the first half of 2021 against losses of RO11.11mn in the corresponding period of last year.
Galfar said its board and management continue to explore opportunities to reduce operating expenses, to maintain competitiveness and to improve the financial results.
‘The company resources are optimised continuously to align with the financial situation and the company succeeded to reduce its overhead costs considerably. The board and management are determined to turnaround and improve the financial performance with continued focus to implement the company’s turnaround strategy,’ Galfar said.
Order book at RO364mn
During the first half of 2021, Galfar received new orders worth RO69mn and is optimistic to receive more contract orders before the year-end. The company continues to maintain significant order book of around RO364mn worth of jobs to be executed.
‘As a flagship for Oman’s contracting and engineering business, Galfar is looking forward firmly to build on its strength and to continue supporting the government endeavours for economic growth and pursuit of important development and infrastructure projects,’ the company said.
Going forward, Galfar expects to maintain a solid project pipeline with a significant number of tenders under evaluation across a diverse array of sectors and clients.
‘We reasonably expect to be successful in a number of those tenders which will ensure stability and sustainability of our strong market position,’ the company said.
Moreover, Galfar said it has identified various diversification opportunities in construction technology (such as 3D printing), energy, minerals and other sectors that will provide long-term sustainability and growth opportunities for the company in the future.
Galfar, however, reported over 6 per cent decline in total revenues at RO103.8mn in the first half of 2021 from RO110.76mn in the same period of last year.
According to Galfar’s report, the parent company has certified overdue receivables of more than RO52mn as of date from the government and government-related projects. Majority of these certified overdue receivables are relating to long-completed transportation and waste-water network projects.
‘The delay in receiving the overdue amounts has caused a significant strain on our cash flow, which resulted in suboptimal execution of certain projects and delay in completion of others. As a result, revenue was lower than planned and lower than the same period in 2020,’ the company added.