Legal firm. Oil, every debbie National Company posted its first profit since 2016. We asked how they did it. Are very happy with the result after two years of a Transformation Program that we gained the benefits of 3. 6 billion. We have seen the result in the First Quarter. We are very happy with the result. The business is much more lean and focused. We should get the benefit of that going into the future. We also had discussion of potential asset sales. Is that still on the table now that you have returned to profit . Definitely not, we are very happy with our assets as a longterm holder. S a lot of benefits and assets and holding assets. There is a lot of potential in terms of spending and getting more cash flow out of the business. We are very happy with the assets as they are. What about Capital Expenditure . You have returned to profitability would change you have extra money to spend. Upthis year, we are wrapping cafex. The board has approved that in the last meeting. We should start seeing the benefit Going Forward in terms of cash flow. Now that you have returned to profit, you have more money to spend presumably. Are you looking to wrap up Capital Spending . Yes, we are actually planning to spend 500 million and it will be across the assets. Andee a lot o benefit efficiency in our portfolio with great opportunities for producing more cash fl f the business. What areas would you be looking to invest in if you are increasing capex . Were looking across the board. Canada is one of our main quality assets. We see a lot of benefit in spending more on our oil fields good that doesnt mean we wont spend across the board. Were looking at opportunities in the u. K. And kurdistan. What does this mean for productn . Investment,up presumably we do will increase production, as well. Can you give us the forecast . The goal is to sustain production at the level where we are or higher. The capex goal is to sustain cash flow as a result of that. We are very much keen on having a sustainable is missed, Sustainable Cash Flow to support the business. Where do you see revenue going . In the First Quarter, it was about 6 but the vast majority of the prophet was driven by costcutting . Will revenue be growing soon . , we are confident that especially after the Transformation Program that we saved 3. 6 billion over the last years, we will start seeing the benefit. The First Quarter result is a reflection of what we have been doing. We are very happy where we are at the moment and very confident we will start seeing the benefit of these programs Going Forward. Were happy where we are at the moment. You confident you can stay profitable even if oil prices do not pick up significantly from the current level . We have reviewed the company in a tough environment and where we are at the moment in terms of being lean and efficient is a sustainable goal Going Forward. What about debt refinancing . Weve seen you sell some bonds. In the current environment, would you be looking to refinance more . Refinancing is part of the plan. The longterm goal is to reduce debt and find ways to reduce the leverage on the company. But it is on the table and we are in discussion to do that. You return to profit, you yeareted the two transformation plan. What is next . We are happy with the company is at the moment. We are a much more efficient business. Our goal is to two produce more cash flow to be more efficient, to start getting the benefit of our Transformation Program over the last two years and to bring value to our shareholders. The chairman speaking exclusively to bloomberg. Of particular interest for the wider energy market, it has to be the Capital Expenditure figure of 500 million as well is th notion that might be looking to invest more in canada, the u. K. And the kurdish region. Yousef coming up, a conversation with a ceo about what opec suldo to Keep Oil Prices afloat. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. Rebounding and a thearching recount in it states all played into oil prices this week. This came ahead of the upcoming producers meeting to decide whether to extend the output cuts. We spoke with a middle east ceo about whether an extension will actually help. Toi think the first thing say is that the inventory levels have been stubbornly high despite the cuts weve seen over the last five months. I think thats to demand as well as supply issues. On the demand side, the gasoline demand has been somewhat lackluster in the last few months, and also you have this story that broke out last week about the chinese authorities trying to tamp down on credit creation, which is the result of a general seleka in the commodities complex. , to yourpply side point about show producers, we have seen about half a million bell have to Million Barrels in the last few months. Margin, it does make some difference us bush lguwhen inventory is not moving as expected. I think on that supplyside, you have that. Wrinkly, compliance both within opec and nonopec over the fivemonth period has not been complete. There have been supply and demand issues, but nonetheless, talking to your point about hedge funds, market has been caught off guard. We have seen some liquidation. I expect that to continue for the early parts of this week, but then for the market to stabilize and probably rebound. You mentioned positioning. It is interesting if you look at the latest eta, some Money Managers are making bets on 40 per barrel oil in the near future. Goldman said they think oil prices wl rebound but the longterm anchor for crude sheens to have shifted lower significantly. Do you agree . I think i do. I see a generally increasingly consensual view that 100 oil is something of the past, the dollar oil wraps is in the past. Perhaps also in the past. Nonetheless, i think that toward the end of this year we will get a decent pickup and i expect to see up to 60 in the future. The latest oil breakdown. You can see your line in blue of those continues to build and also your reference line, the wpi in yellow. You can pull it up on your bloomberg. Sayingght columnist is that the the question in the oil market is not whether opec will extend, because that iprty much baked in. Usually, is opec going to raise its game . They going to take more oil out of the market and can they even do that . It is possible and it is probable that they will extend the cuts. I think over the midterm that will have an effecbeuse the while you haves, the output increasing, they have a limited capacity compared to what opec is prepared to sacrifice in the medium term. The latestntains at cut, it is very difficult for the shale producers to bridge the gap. I would expect industries to be affected over the midterm. In terms of what this means for saudi arabia, lets start with the largest economy in the middle east, they just embarked on this process, and a couple of weeks ago they do a uturn, restarting restoring bonuses. They say we can afford to do that. Downside move in oil, is that going to turn everything on its head . Not yet. Their mind that this year, the if it stays at these levels, concerns will again be raised about the prospects for austerity measures across the region, but for now, i would say that as a shortterm move in oil prices, i would wait a week or two before making that judgment. You made a great point, which is the extension of the opec agreement is pretty much debate in to the market at this point. Given that agreement doet seem to have had the desired effect, what else can opec do at this point . I think they need to persist thhis policy, this because as i said, entry level has been stubbornly high but at some point as you maintain these cuts and shale perhaps starts to peak in terms of the additional barrels a can add in the market, you will see an adjustment. I think that is what the oil analysts are suggesting i dont disagree. And looking at some of the Research Notes that came out. Saying that there is no vision for the fed to not march the rate up. A review fromg at Goldman Sachs, they are increasing off of a june said hike. Down toly when it comes the core, are we seeing signals of a labor market overheating . Not yet, but nonetheless, as various said fed governors have discussed recently, we are at near full employment and that has implications or the economy. There is a reason why the lab statistics are the most closely watched him a that is because an increase in workforce and wages and consumption are all tied into that data. I think it does speak to the likelihood of increasing Interest Rates of the year. We pulled up the w. A. R. Pete function, it is a great way to see how expectations are shaping up. This is based on Interest Rate swaps. You can see how that changed from a week earlier. The remarkable, the difference. Have you changed your position in terms of when we will see the fed hike . We have been consistently hawkish on the outlook for Interest Rates based on the strong labor market. The United States generated 178,000 jobs per month over the last 16 months or so. That is a pretty decent number. Is 4. 4 , thatate is a really low number. I think we will definitely see a june hike and perhaps one or two more before the end of the year. There is no urgency, the fed remains relatively sanguine, but rates are going up. Doubles devils advocate. If we think oil prices will remain relatively muted and we have the missing wage growth, could that give the fed it room to avoid hiking or maybe not hike in june . Of june is a in. Whether we have one or two more in the latter half of the year will depend on what you mentioned. There is room for them to be slightly more dovish in the second half but i believe they will hike twice more, and the reason for that if the Global Economy generally is doing much better than it was some months back. The other thing to consider is the possibility that they will start a quantitative tightening by selling, or rather not renewing theirurases, their asset personages asset purchases for the end of the year. That might have a need to raise Interest Rates. We have the fed looking to raise rates and concerns about china. You will remember those for a trio ofwoies that sparked a huge selloff around early last year. Have u. S. Equities at work highs, we have emerging markets rally, what is going on . I think it is the trump effect. There is a lot of optimism and belief in the fact that he will deliver on his economic agenda. We saw a small victory on health care last week and i think that may translate into a greater credibility in terms of investors willing to believe he can go on and do the economic agenda, which includes spending, tax cuts in the wee of hundreds of billions of dollars potentially by american corporations from overseas back into the american comedy. E into the eran conomy. The fact that they are also enough, and you spoke about it a little bit, visit also tell a story about concerns when it comes to demand and concerns about Global Economic momentum . Talk us through this. I think china is the worry. If you look elsewhere in the world, it is difficult to find significant weakness in any of the major economies. The u. S. Is doing reasonably well, europe is increasing in terms of its momentum, its growth momentum, japan is doing reasonably well by some standards. It is diffulto find a major economy or a major part of the world that is going to direct the ob economy down this year. China, however, is the unknown and we will wait to see what happens. Always great to have you on the show. Up next, making the right moves. We spoke to someone from the emirates about Property Market apared that is next. This is bloomberg. Yousef welcome back to the best of labor markets middle east. Theaes First Real Estate Investment trusts reported lower earnings on the slump of property valuations. We spoke with the ceo and deputy chairman. For the quarter, what is , the firstrtant quarter we invested a lot in our portfolio. Today, the key thing for us is we increase our operation and our net cash profit by 90 yearbyyear. In terms of what it means for the road ford, because ultimately there are concerns about whether or not the divine Real Estate Market has bottomed out, how to set affect your outlook how does that affect your outlook . We are srtg to investigate in the market. What this means for the trade, we invested a lot in the Third Quarter in our portfolio. We see the benefit in cash flow and we are going to increase in your future. Near future. When you say near future, when are you talking about . Your stock is down about 8 this year already. We announced yesterday that we are going to have increased dividend in june. Our is an increase on current stock price and we believe this dividend, which has been consistent over the past increase, is going to very same. The next dividend is going to be in january, and we dont give any guidance on whether this will increase of the following one, but what we see is that we will have to increase it very soon. Some analysts say there is limited Growth Prospect with in your existing portfolio. Will you be broadening your Investment Strategy . I beg to differ strongly on this. One of t cticisms we had was that we had large, empty buildings. Those buildings are starting to be filled up. We were at 81 occupancy and we have had good grades. When we fill the vacancy, it flows through immediately to the cash profit and dividend. There is Significant Growth here. 6700 dividend from text to invest. Im looking at your total return yeartodate. What is the market underpricing here in terms of the Success Story you are trying to point out . I think investors were quite doubtful we would incrse cash flow that quickly, and indeed it is a big jump, 90 yearoveryear. I understand some of them were skeptical about this. Today, we are seeing an increase in the cash flow. To ank is going to revert normal price. Tois this an opportunity then, you are pointing out the cash flow to raise your development and to play some of that capital. A schoole are building at the moment. We did another one last year. They all do very well. Thanployed money at more 20 . Also, the market is down at the moment. Underestimate buying buildings because prices cheap. What buildings are in demand right now . The markets down, so the value of the properties is pretty low. What we see in terms of building what we invest in, is mostly schools. Here it is quite easy, only start a school, we have a longterm operator. We see a lot of opportunity in office buildings, which have two seor schools and offices. We have some opportunities with occupancy and a very attractive dividend price. Ceo of emirates we. Thank you very much. At how thet, we look reasons buiin builders can recover from the collapse of price. These days families want to be connected 24 7. Thats why at comcast, were always working to make our services more reliable. With technology that can update itself. And advanced Fiber Network infrastructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Yousef welcome back to the best of Bloomberg Markets middle east. Investors in the uae construction stockrember the good old ds en oil was about 100 a barrel and that encouraged a seemingly endless stream of lucrative projects. Now, a reality check with crude about halfth, companies are struggling to them build their tolerance sheets. We took a look at this. In terms of what we have seen, the pains of the construction sector, and we have built a chart on the basis of some of the notes you sent so clients can get an additional perspective on these construction stocks. Line, thereference main index. That is your line in yellow. This is a threeyear horizon. You can see investors losing faith these two companies. What is the wider story that these two companies are telling us . I think this is beyond the drop in oil prices and the government cuts in spending. I think these two companies have a lot of things in common. A lot of missed private happened, and that backfired. They were expecting the market to pick up faster than it did. Little bit inup a 2014 and then things went down the hill again. Oilhink it is more than an icissue, it is an operational issue in these companies. If you look at restructuring in the past three or four years. Yes, Government Spending did impact the lack of projects in the market in this region, but i think they also have an operation problem because that was not the problem of every Construction Company in the region. Is a possible indicator of demands moderating or slowing down in the uae . Of course, you can see that demand is less on tourism, on retail. Thatu ve Companies Continue to sell and improve on their balance sheets, then you have arab tech and others that have a different story. Which is it . I think there are two different stories. Trusted brand. Dsi are different. It is just a different story. Dor is a brand, people trusted blindly. We keep hearing rumors about consolidation in the uae. At are you hearing on the ground . There are so many rumors that more mergers will happen between banks are companies. We have not had a great track record in this part of the world with mergers. We have not seen it actually working for so many people. Plus, m a at the moment in this part of the w