Drake & Scull net profits fall 43% for first half

Project win momentum has increased, this year, says DSI CEO

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Drake & Scull International, the MEP giant, saw net profits fall by more than 40% in both the three-month and six-month periods of 2010 compared to the equivalent periods last year based on “challenging time” in the industry.

Half-year results for the Dubai-based firm, revealed to the stock exchange today, show that after-tax revenue fell 43% from AED151.8 million to AED86.3 million as contract revenues slipped by just over a fifth from AEED1 billion in 2009 to AED789 million up to June this year.

In this time general expenses rose around AED24 million and finance costs increased from AED6.67 million to AED11 million.

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Second-quarter results found net profits falling from AED81.7 million to AED44.5 million compared to the second quarter last year, down 45%, though up 7%on the first quarter of 2010. Contract revenue fell from AED512 million to AED411 million when comparing the second quarters of this year and last year.

This dip is despite a string of contract wins across the GCC, including an SR469 million deal to provide MEP work to Riyadh’s Information Technology and Communications Centre (ITCC) ‘Smart City ‘ project, and a SR450 million contract for its construction arm in Saudi Arabia to build the Jawharah Tower in Jeddah.

This year saw the company acquire its Qatar branch - Drake & Scull International Qatar LLC - and the company has so far contributed AED326.5 million in overall profit of the group.

DSI CEO Khaldoun Tabari said the industry has faced “challenging times” over the last year and cited the company’s increased AED4.8 billion backlog of projects and profitability compared to the first quarter.

“We anticipate that this trend will continue through to the second half of the year, particularly with the planned acquisitions of two Saudi companies during this time, which we believe will contribute to generating greater revenue in the near future,” he said.

“DSI has maintained its margins, improved its revenues and bettered its collections in Q2, and our momentum of winning projects has also improved since the beginning of the year,” added Osama Hamdan, DSI chief financial officer.

Drake & Scull’s shares have fallen 0.7% so far today and are currently trading at 81 fils. Shares have increased in value since the beginning of this quarter, from 78 fils at the start of July, following a fall from an even AED1 at the beginning of April.