Construction ramps up in Dubai ahead of World Expo 2020. Tasneem Alsultan / Bloomberg
Construction ramps up in Dubai ahead of World Expo 2020. Tasneem Alsultan / Bloomberg

UAE businesses look at transformation strategies to weather challenging market conditions



Businesses in the UAE are looking to overhaul internal processes, and may consider asset disposal and financial restructuring. They are seeking to evolve in the wake of softer economic conditions and lower oil prices that continue to pressure working capital and cash flows.

"Transformation is the buzzword," said Raj Mehta, a partner and head of advisory firm KPMG's restructuring and performance improvement business in the lower Gulf region. "There is a strong realisation that businesses operating in sectors such as oil and gas, construction and consumer, need to evolve to remain competitive".

The UAE, the region's second biggest economy, like its Arabian Gulf peers, relies heavily on the sale of hydrocarbons for revenue. A slump in oil prices from the mid-2014 peak of US$115 per barrel has forced the government to cut public spending, which has slowed the pace of economic growth.

Consumer spending has been sluggish, affecting retail and consumer businesses in the country, while properties and related construction sectors, which recovered well from the 2008 financial crisis, have also faced some headwinds in the past two years.

Abu Dhabi, which accounts for about 6 per cent of the world's proven oil reserves, has already consolidated some of the banking and financial assets and has made sweeping changes in the emirate's oil and gas sector. Abu Dhabi National Oil Company (Adnoc), among other efforts at reorganisation, has streamlined its operations by combining two of its largest offshore operations to drive efficiencies.

Smaller companies related to oil and gas along with the petrochemicals sector are also trying to find ways to weather what is expected to be a prolonged period of lower oil prices.

"You pick any name within the oil and gas or related sectors and it will almost definitely be going through some form of transformation," Mr Mehta said.

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Adnoc's new corporate strategy includes consideration of public flotation of shares in its select service business units and the formation of new partnerships. The company is considering the share sale of Adnoc Distribution, which includes more than 300 service stations throughout the UAE. Media reports in July suggested that the partial sale of the company to the public could value it up to $14 billion.

However, despite low oil prices and weaker revenues, governments in the region are unlikely to sell the core oil and gas assets as part of their efforts to unlock value and raise alternative financing to support their economies. Non-core assets outside the Arabian Gulf where minority positions are held are a different story. They are under scrutiny and could come to market for sale, according to Mr Mehta.

"The focus is now on driving efficiencies within the larger government-backed assets. These companies have large and diverse portfolios," he said, adding that the drive to change the business verticals and in-house scrutiny is strong. "We are at the early stages of that. Are they taking a closer look, absolutely? Have they worked out what they want to do with it? That's in process."

The need to find ways to change the business models is equally intense in construction and consumer sector busi­nesses that are plagued by capital constraints and cash flow issue, he noted.

"There's a lot of pressure on working capital within the consumer businesses including retail, food and beverage and hospitality industry. Businesses with a demographic element attached to them are also facing a lot of financial, sales and operational challenges," he said

"Banks are also taking a very hard look at the numbers not only on their books but also on the re-financing they might have to do and see if there is a justification for that."

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Malcolm & Marie

Directed by: Sam Levinson

Starring: John David Washington and Zendaya

Three stars

Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

RESULTS: 2018 WORLD CUP QUALIFYING - EUROPE

Albania 0 Italy 1
Finland 2 Turkey 2
Macedonia 4 Liechtenstein
Iceland 2 Kosovo 0
Israel 0 Spain 1
Moldova 0 Austria 1
Serbia 1 Georgia 0
Ukraine 0 Croatia 2
Wales 0 Ireland 1

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
MATCH INFO

Sheffield United 3

Fleck 19, Mousset 52, McBurnie 90

Manchester United 3

Williams 72, Greenwood 77, Rashford 79

Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
 
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
 
Round 3: February 7-9, Dubai Autodrome – Dubai
 
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
 
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
ALRAWABI%20SCHOOL%20FOR%20GIRLS
%3Cp%3ECreator%3A%20Tima%20Shomali%3C%2Fp%3E%0A%3Cp%3EStarring%3A%C2%A0Tara%20Abboud%2C%C2%A0Kira%20Yaghnam%2C%20Tara%20Atalla%3C%2Fp%3E%0A%3Cp%3ERating%3A%204%2F5%3C%2Fp%3E%0A
The five pillars of Islam
The years Ramadan fell in May

1987

1954

1921

1888