Drake & Scull's 2014 profit drops by 40%
Dubai-based contractor faces delays in KSA and makes provisions against money owed in the UAE
Dubai-based contractor Drake & Scull announced a 40% drop in profits for 2014, which it blamed on delays to Saudi projects and to provisions it has had to make against money it says it is owed in the UAE.
The company reported net profits of $29.9m (AED110m) for 2014, compared to $49.5m a year ago.
Revenues declined by 1% to $1.3bn.
The company's CEO, Khaldoun Tabari, said that it had a 'strong' start to 2014, boosted by several new project awards.
However, it said in the second half of the year "the entire region experienced unforeseen global economic challenges and uneven geopolitical developments".
He said this has impacted on the construction industry. "A cautious sentiment in the real estate sector has led developers to become more price-conscious, which has lengthened the project development cycle in all our key markets," he said.
"This has resulted in delays in our collections, which created a slowdown in our revenue generation. The impact of this also affected our profitability margins.”
New contract wins meant the firm increased its project backlog by 20% over the course of the year to a record high of $3.92bn.
Tabari said the firm continues to see Saudi Arabia and the UAE as the main drivers of economic development in the region, but that it also hopes to see an upswing in Qatar. It is also looking to gain market share in the Levant region.
"We will devote our energies to consolidating our position in the civil business, in our key areas of UAE, KSA, Jordan and Algeria and lay emphasis on the delivery of our projects at hand," he said.
Chief financial officer Mukhtar Safi also added that it will look to cut operational costs and overheads in a bid to improve margins.