Drake & Scull 2012 Net Profit Drops 41.8%

Dubai-based construction firm Drake & Scull International (DSI), announced that net profit for the 2012 reached Dhs128 million, down 41.8 per cent compared to Dhs220 million in 2011.

Revenues during the year rose 6.5 per cent to Dhs3.3 billion, up from Dhs3.1 billion in the previous year.

DSI, which specialises in civil contracting, mechanical, electrical and plumbing (MEP), reported that earnings per share (EPS) for 2012 stood at Dhs0.05 in comparison to Dhs0.09 recorded last year.

Total project awards announced in 2012 reached Dhs5.4 billion, compared to Dhs4.4 billion awarded in 2011. The total order backlog also increased 30 per cent year-on-year to Dhs9.1 billion, DSI said in a statement.

Osama Hamdan, CFO of DSI said: “The decline in the consolidated net margins in comparison to last year is primarily attributed to the growth in the civil business and the increase in the SGA associated with the launch of the oil & gas and rail divisions in addition to the establishment of new offices in Iraq and India.

“Competition will continue to be a critical challenge to our pricing strategy. However, gross and net margins across all markets for 2013 are expected to stabilise since the cost of investment in new areas and business streams have been incurred in 2012,” he said.

DSI’s fourth quarter net profit reached Dhs46 million, up 475 per cent compared to Dhs8 million in Q3 2012. Fourth quarter revenues also rose 100 per cent quarter-on-quarter to Dhs1.2 billion.

“The fourth quarter top line and bottom line growth reflect the increased momentum in productivity across the civil projects in Saudi Arabia which were subdued in Q3 due to the seasonal trend and the summer holidays,” DSI said.

“We made significant progress in the fourth quarter in enhancing our revenues and net profit growth as we have gained momentum across all subdued projects in Q3,” said Hamdan.

Khaldoun Tabari, CEO of DSI added: “The GCC continues to be our growth engine, and we expect in 2013 accelerated growth for DSI in emerging markets and particularly KSA and Qatar.”

In December last year, DSI said that its joint venture with Arabian Construction Co won a new contract in Saudi Arabia valued at SAR2.7 billion ($719.96 million), to build the third phase of the Jabal Omar development in Mecca.

In November, the company also announced that it had received three contracts worth a total of $86.7 million in Abu Dhabi and Saudi Arabia.

Read Gulf Business’ exclusive interview with Khaldoun Tabari, CEO of DSI, here.