Drake and Scull International posts Dh1.83b revenues in H1

Drake and Scull International (DSI) on Monday declared Dh1.83 billion revenues for the first six months of 2016, and also reported a net loss of Dh216 million on project cancellations and one-off provisions.
The share price of the Dubai-listed firm dropped by 3.7 per cent to close at Dh0.52, with 95.5 million shares transactions after the financial results announcement in the morning. DSI reported a year on year decline of 23 per cent in revenue for the first half of the year compared to Dh2.39 billion achieved in the same period last year.
The fall in revenue is due to the significant contraction and prolonged volatility in the regional construction sector, the slow progress on ongoing projects, a decline in new project awards and adjustments across key markets in the GCC, the company said in a statement.
The net loss for H1, 2016 was Dh216 million as compared to a net profit of Dh34 million in H1, 2015. The loss is specifically attributable to project cancellations and additional one-off provisions taken in light of the challenges in the sector. A majority of these provisions emanate from Saudi Arabia, with the total impact on the bottom line amounting to Dh192 million. These cancellations were executed by clients on individual one-off projects with minimal bearing on DSI's ability to continue operations in Saudi Arabia and other markets.
DSI's ongoing projects order backlog stood at Dh9.37 billion as of June 30, 2016, as compared to Dh13.24 billion in H1, 2015. The decline in the projects' backlog reflects the adjustments carried out in Q2, 2016 pertinent to project cancellations in KSA.
Despite the slowdown in the regional project awards, DSI managed to secure Dh570 million worth of new project awards year-to-date including the Dh343 million Doha Metro Depot ?and Stabilising Yards contract as well as the Dh227 million ?Zubair Oil Field project in Iraq.
Khaldoun Tabari, CEO and vice- chairman of Drake & Scull International, said: "Our financial results have been impacted due to the substantial provisions for project delays and cancellations over the last six months, brought on by clients principally based in Saudi Arabia. We believe that these developments reflect the considerable challenges we have been facing across the region due to a very challenging macro-economic environment."
Tabari added: "Despite the challenges, our business remains operationally and financially robust. Due to our longstanding partnership with major international and local banks, we continue to retain strong lines of credit and secured access to funding to deliver our ongoing projects backlog. We remain committed and focused on running efficient, low-cost and sustainable and cash generating operations and are confident about the medium- and long-term prospects of the regional industry."
- abdulbasit@khaleejtimes.com