Dubai: Project delays in Saudi Arabia saw Drake and Scull International (DS) post on Sunday a near 38 per cent drop in half-year net profit for the six months ending June 30, compared to a year earlier.
The company declared a Dh71.7 million net profit for the period compared to the Dh114.9 million it reported last year. Revenues reached Dh2.353 billion, down 8.3 per cent on last years Dh2.566 billion.
Shares fell 4.2 per cent to Dh1.37 each on the Dubai Financial Market following the release of the company’s half year performance.
“Our revenue growth was slightly hindered and our profitability dropped year on year due to the delays on our major projects in KSA. We incurred significant cost overruns in the General Contracting business in the first quarter and second quarter which affected operational margins and our bottom line,” stated Mukhtar Safi, chief financial officer of DSI.
Iraqi market
Revenues generated by Saudi operations declined 17.5 per cent on last year to Dh1.14 billion. The contribution of revenues from the Iraqi market dropped 29.4 per cent to Dh128.5 million “as the Zubair Field contract … nears completion,” the company said in a statement.
“The delays in approving large variations on our ongoing projects in Saudi Arabia had directly impacted our working capital and revenue certification cycle and caused the Work in progress (WIP) and receivables Days to increase compared to December 31 2013. This in turn affected our operational liquidity and caused cash flow from operations to decrease,” stated Safi.
