Dubai Contractor Drake & Scull Posts 27.1% Q1 Net Profit Drop

Dubai’s Drake & Scull said on Monday that unforeseen delays to two major projects in Saudi Arabia were responsible for the contractor missing analysts’ expectations with a 27.1 per cent decline in first-quarter net profit.

The firm made a net profit of Dhs45.7 million ($12.4 million) in the first three months of 2014, compared with Dhs62.7 million in the corresponding period of last year, it said in a bourse filing.

Three analysts polled by Reuters, on average, had forecast a net profit for the period of Dhs58.9 million.

Shares in Drake & Scull initially slumped 3.4 per cent in early trading before recovering slightly to Dhs1.72, a 1.7 per cent reverse.

Mukhtar Safi, the firm’s chief financial officer, said in a statement it had faced “a slowdown in our general contracting business in Saudi Arabia due to unforeseen delays in two major projects which are not recurring,” and that things would improve in the second quarter of the year.

He did not name the delayed projects.

Safi added that the contractor’s strategy for the rest of the year was aimed at strengthening its balance sheet and reducing costs as it delivered on its backlog of work worth Dhs12.2 billion.

Drake and Scull’s gross profit in the first quarter fell as the cost of executing its contracts rose 3.3 per cent while contract revenue only rose 2.1 per cent. The firm’s income tax expense also quadrupled to Dhs7.5 million.