DSI acquisition costs linked to flat Q4 results

Dubai-based contractor says expansion plans affected profit margins

DSI CEO Khaldoun Tabari.
DSI CEO Khaldoun Tabari.

Dubai contractor Drake & Scull International’s fourth quarter net profit stayed flat at AED41m, matching earnings in the same period a year earlier, the company said Monday.

Net profit for the year fell to AED162m from AED280m in 2009, DSI said in an emailed statement, hit by competition and acquisition costs.

"The severe competition in the industry, in addition to the significant costs we incurred to complete our acquisitions and expansion plans, contracted yearly profit margins and restrained bottom line growth," CEO Khaldoun Tabari said in the statement.

Drake & Scull, which focuses on mechanical, engineering and plumbing businesses, is expanding its work outside the UAE, where it currently gets most of its sales.

DSI recently won a contract for the King Abdullah Petroleum Studies and Research Center in Riyadh for a total value of SR2bn and is looking to break into the Iraqi and Indian markets.

The contractor had a backlog of AED4.9bn as of December and has added AED2.7bn worth of work since the beginning of 2011, it said.

“We are confident that the investments made over the last 20 months will yield positive results and will foster revenue growth as we move forward,” said CFO Osama Hamdan.

Drake expects a gradual reduction in administrative and operational costs in 2011, Tabari said.

“We expect a gradual reduction in administrative and operational costs during 2011 and our diverse geographical spread and that integrated engineering capabilities will allow us to profit from the economy of scale,” he said.

The acquisition of a civil company in Saudi Arabia is on track and will be completed by the end of the first quarter, it said.
 

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