Drake & Scull second quarter net profit up a fifth
MEP giant cites geographical diversity as driver of contract growth
Drake & Scull International saw net profits rise by more than a fifth in the second quarter as contract wins and a growing back-log supplement the company’s regional expansion.
The Dubai-based MEP contractor – which also has civil engineering, infrastructure and utilities servicing divisions – saw after tax earnings reach AED 55m, up 22% from the AED 44m posted for the equivalent period last year. Top-line revenue rose 79.8% to AED 739m, up from AED 412m.
The company has been aggressively expanding around the Gulf region in the wake of the financial crisis that heavily hit its home emirate. The company has been competing for contracts, launching new service divisions and acquiring both its own subsidiaries and rival MEP players.
The company’s order back-log at the end of June was AED 7.5 billion, up 56% on last year. Around half of this derives from Saudi Arabia, where the company is targeting around $2bn worth of work. Last year it bought 65% in Drake & Scull Construction, the company’s subsidiary for all civil engineering work outside UAE, as well as Saudi MEP contractor International Centre for Contracting for $34m.
This year's contract wins include a $42.19m (AED 155m) set of deals in Kuwait to commission and execute all works for agovernmental buildings facility, a sports complex, a mosque and a printing press establishment, and a $26m deal in Qatar with a private client.
Earnings per share were AED 0.03, compared with 0.02 AED reported in same period of 2010.
“The increased impetus in revenue growth is attributable to the geographical diversity of our operations and group’s expertise, the variety in our business portfolio and the company‘s exposure to different market segments across various industries,” said Khaldoun Tabari, DSI CEO, in a statement issued Thursday.
“We are satisfied with our revenue growth in the MEP and the civil business which recorded a year over year growth of 43 % and 376 % respectively. Returns from our Water and Power subsidiary [DSI IWPP] remain strong and reflect the effective integration of our service offering and the resilience of our successful business model.”
“This year is a year of growth and integration for DSI. We are still in the expansion mode and we have incurred significant administrative costs and set up costs during the first half of the year,” Osama Hamdan, CFO, added. “Our primary focus for the second half of the year is controlling costs and efficiently allocating resources to optimise our expense base while ensuring growth in market share.”
Chet Riley, an analyst at Japan's Nomura International, rated the company a 'buy' on Thursday, echoing the position of Athmane Benzerroug at Deutsche Bank.