Analysis: the backlog headline and the year on year fall
The number the release leads with is AED 32.5 billion, up 21.5% in three months. The summary table in the same release gives backlog of AED 32,453 million against AED 35,408 million a year earlier, a fall of 8.3%. Both are true. The order book grew sharply during the second quarter, on the strength of one award, and it is still smaller than it was in June 2025 while revenue recognition has accelerated by two thirds. That is the arithmetic behind coverage of 2.0x, which sits at the bottom of the 2.0x to 2.5x band the company says it wants over the medium term. A contractor converting backlog faster than it replaces it eventually has to win more work or slow down, and the Sphere award is what kept coverage inside the target this half.
The second thing the release establishes is that the profit problem is contained in one segment rather than in pricing across the group. Building and Construction improved its gross margin by 47 basis points while doubling revenue, and Related Businesses added 80 basis points. Group gross margin still fell 430 basis points, because Energy Services turned a positive 9.4% margin into a negative 5.7% one. The company describes the cause as fixed costs recognised against disrupted offshore work rather than an expansion of the cost base, and the administrative expense line supports that: overheads rose 1.7% while quarterly revenue rose 51.3%. If the characterisation holds, the margin damage is a timing effect on idled capacity, not a change in what ALEC can charge.
Two features of the disclosure limit how far that reading can be taken. ALEC has not quantified the cost of the offshore stoppages separately, so the split between disruption and ordinary contract performance in the AED 201.5 million second quarter gross loss is not visible. And Energy Services is 44.1% of the closing backlog, which means the segment with the negative margin holds nearly half the future revenue the group has secured. On the arithmetic of the revised guidance, that work has to return to a positive margin, since a full year EBITDA margin of 5% to 8% is not reachable from a first half of 4.9% without improvement in the second.
The balance sheet sits outside that question. Net cash of AED 1.0 billion, cash of AED 2.4 billion, capital expenditure below 2% of revenue and free cash flow to the firm up 49.8% are not the constraints here. The next disclosure worth reading is the third quarter, where the useful figures are the Energy Services gross margin, whether backlog holds above 2.0x coverage without another single award of Sphere’s size, and whether the Pillar II tax charge that weighed on the half is now running at a steady rate.
What the documents say
ALEC Holdings PJSC (DFM: ALEC) reported revenue of AED 8,990 million for the six months to 30 June 2026, up 67.6% year on year, and a second quarter net loss after tax of AED 17 million. The results, released in Dubai on 13 August 2026, pair the fastest revenue growth the group has published with a downgrade to its full year margin guidance, and both trace to the same segment.
Growth in three segments, a loss in one
Building and Construction revenue more than doubled to AED 5,837 million from AED 2,840 million, a rise of 105.6%, on execution at the Stargate Data Centre, the Wynn Al Marjan Island resort and the ilmi Science and Discovery Center. Its gross profit margin improved by 47 basis points to 7.0%. Related Businesses grew 123.7% to AED 2,586 million with the gross margin up 80 basis points to 12.4%, helped by mechanical, electrical and plumbing work and facade work on the same two projects.
Energy Services is the exception. Revenue grew 36.9% to AED 2,754 million, but the segment recorded a gross loss of AED 157.5 million for the half, a negative gross margin of 5.7% against a positive 9.4% a year earlier. In the second quarter alone, revenue rose 8.9% to AED 1,255 million while the gross loss reached AED 201.5 million, a negative margin of 16.1%. Chief Executive Officer Barry Lewis said extended stoppages to offshore work during the regional conflict curtailed activity in the business while the group continued to carry the cost of idled manpower.
The group numbers
Group gross profit fell 4.4% to AED 513.1 million and the gross margin dropped 430 basis points to 5.7%. In the second quarter, gross profit of AED 103.3 million represented a margin of 2.4%, down 720 basis points from 9.6%. EBITDA for the half rose 2.7% to AED 440.4 million with the margin at 4.9% against 8.0%. Second quarter EBITDA of AED 78.5 million was 65.3% lower and the margin narrowed to 1.8% from 7.8%.
Net profit after tax for the six months fell 10.5% to AED 213.8 million, a margin of 2.4% against 4.5%. The second quarter produced a net loss of AED 16.6 million compared with a profit of AED 124.5 million. Chief Financial Officer John Deeb attributed the half year decline to lower operating profit in Energy Services and to higher income tax expense following the implementation of OECD Pillar II rules in certain jurisdictions, with stable overheads and higher finance and other income providing a partial offset. Administrative expenses rose 1.7% against revenue growth of 51.3% in the quarter.
Cash generation held up. Net cash from operating activities rose 7.6% to AED 694.6 million from AED 645.7 million; the company said a higher positive contribution from working capital movements drove the improvement, with cash generation before those movements broadly stable. Capital expenditure of AED 170.9 million was 1.9% of revenue, against AED 168.4 million a year earlier. Free cash flow to the firm rose 49.8% to AED 544.8 million from AED 363.6 million. Total assets grew 15.3% to AED 12.2 billion from AED 10.6 billion at the end of 2025, net working capital rose to AED 1.1 billion from AED 856.2 million, and cash and bank balances reached AED 2.4 billion from AED 1.6 billion, leaving net cash of AED 1.0 billion and net cash to trailing twelve month EBITDA of 0.9x. The board approved an interim dividend of AED 100 million payable in October 2026.
Backlog and awards
Closing backlog was AED 32,453 million, or 2.0x trailing twelve month revenue, up 21.5% from AED 26.7 billion at the end of the first quarter and 7.1% from AED 30.2 billion at the end of 2025. Building and Construction accounted for approximately 55.3% of it, Energy Services 44.1% and Related Businesses approximately 0.6%. The UAE held 93.1% of the total, with 6.9% in Saudi Arabia.
The half’s largest award was The Sphere Abu Dhabi, where ALEC was appointed main contractor by the Department of Culture and Tourism, Abu Dhabi. The company values it at around AED 6.4 billion, delivered through 2029, and calls it the largest single contract in its backlog and the world’s second Sphere after Las Vegas. Subsidiary Target Engineering Construction Company won three engineering, procurement and construction awards on ADNOC’s Das Island totalling more than AED 1.8 billion, covering crude oil storage and facilities and delivered over 10 to 36 months. Total workforce grew 6.4% since December 2025 to approximately 61,300 staff and labour.
ALEC cut its full year 2026 guidance to revenue growth of approximately 45% to 50%, a gross profit margin of approximately 6% to 9% and an EBITDA margin of approximately 5% to 8%, with capital expenditure of approximately 2% to 3% of revenue and gross leverage of approximately 1.0x. It left the medium term targets unchanged at a gross margin of approximately 10% to 11%, an EBITDA margin of approximately 8% to 10%, implied revenue growth of approximately 7% to 8% a year and backlog coverage of approximately 2.0x to 2.5x.
The market ALEC is building into
The demand picture the company describes is visible in the national accounts. The World Bank’s Gulf Economic Update reports that construction contributed 0.6 percentage points to UAE GDP growth in the first quarter of 2025, alongside manufacturing and financial services at 0.8 percentage points each, with non-oil activities up 5.3 percent and non-oil sectors accounting for 75.5 percent of real GDP in 2024. The World Bank’s regional update projects UAE growth of 4.8 percent in 2025, 0.9 percentage points faster than 2024, with activity broad-based across financial services, construction, transport and real estate.
