Drake & Scull hints at further acquisitions

Ben Roberts , August 19th, 2010

Drake & Scull International has given further indication of upcoming acquisitions, possibly in Saudi Arabia , according to recent announcements.

The MEP giant, which earlier this year set up a construction arm in Saudi Arabia, announced that it is undertaking due diligence on possible targets in minutes of its board meeting, held on Monday, though did not elaborate further on the nature or profile of the targets.

But in the latest financial statement of the company, which revealed a fall in net profits for the first half of 2010 of 43%, DSI CEO Khaldoub Tabari said that he expected the company’s improved revenues from the first quarter to the second “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”.

DSI has made a number of acquisitions this year alongside some big contract wins. In April the company bought out its Qatar business – DSQ – to capitalize on the construction opportunities in the country, and followed it up with winning an AED140 million contract for a mixed use project in the Al Sadd region of the capital, Doha.

DSQ has worked on a number of key projects in the country, including the West Bay Complex, and on January 2010 its backlog stood at AED166 million.

In May, the company won its first two contracts for its Oman operation. The company is set complete the work on the Sohar Court Complex (SCC) and the Oman National Museum (ONM) in Muscat by June 2011 and September 2011 respectively.

DSI’s new construction arm in Saudi Arabia – DSC KSA – won a SR450 million contract to build the Jawharah Tower in Jeddah.

Net profits for the first six months of 2010 fell to AED86.3 million and contract revenue slipped from AED1 billion to AED789 million, indicating that it may take a number of months before the proceeds from the recently won contracts start to filter through onto the balance sheet.