Drake & Scull International (DSI), has reported total revenues of Dh2.353 billion ($640.62 million) and a  net profit of Dh71.7 million ($19.52 million) for the first half of 2014, representing a top line and bottom line decrease of 8.3 per cent and 37.6 per cent respectively, compared to the first half of 2013.

The company said the decline was caused by operational delays on major projects in Saudi Arabia.

Earnings per Share (EPS) reached Dh0.029 compared to Dh0.044 recorded last year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) reached Dh149.9 million compared to Dh220.4 million dropping 32pc year-on-year.

The decline in total revenues, EBITDA and net profit is mainly attributed to the lower contribution of the general contracting business which dropped 5pc, 2.5pc and 37.1pc respectively compared to last year mainly from operations in Saudi Arabia. However, the engineering business's contribution to the top line increased by 6.6pc, a statement said.

The UAE market's contribution to total revenues was sustained at Dh496.8 million while Saudi Arabia recorded Dh 1.14 billion dropping 17.5pc compared to last year. The contribution of the Iraqi market stood at Dh128.5 million declining by 29.4pc as the Zubair Field contract in southern Iraq nears completion. However, the Oil & Gas business will continue to contribute to the top line and bottom line growth of DSI from ongoing operations in Egypt and expected awards in southern Iraq by the end of the year, it said

The first half of the year showed signs of improvement in the industry and witnessed an increase in momentum with more market activity as total project awards year to date reached Dh4.6 billion across Mena, South Asia and Europe, the company said.

The General Contracting, Engineering and Waste Water businesses constituted 11pc, 35pc and 5pc, respectively of the cumulative project awards in the first half of the year.

The Oil & Gas business also constituted 48pc with the “Carbon holding Tahrir Petrochemical complex” award in Egypt which is expected to significantly contribute to the bottom line growth and net margin growth of the company from Q1 2015 onwards, it said.

The  company's order backlog reached Dh14.27 billion representing a year-on-year increase of 21.7pc. Saudi Arabia remains the largest contributor to the backlog accounting for 30.8pc, followed by Egypt and the UAE each accounting for 18.7pc and 17.4pc respectively as of June 30.

Q2 2014 revenues reached Dh1.101 billion compared to Dh1.340 billion achieved in Q2 2013 and EPS closed at Dh 0.011 representing a decrease of 41pc compared to the same period last year.

Mukhtar Safi, CFO of DSI, said: “Despite the increased momentum in market activity in the region, the first half of the year was challenging for DSI. Our revenue growth was slightly hindered and our profitability dropped year on year due to the delays on our major projects in Saudi Arabia. We incurred significant cost overruns in the General Contracting business in Q1 and Q2 which affected operational margins and our bottom line. However, these costs are covered by large claims which we expect our clients to approve towards the end of this year, to early next year. "

“We also expect productivity to be stagnant in Q3 2014 due the seasonality trend and the slowdown in operations during the wholly month of Ramadan. Partial recovery of liquidity, operational and profitability margins is expected to materialize by end of the year as the major projects in the Engineering and General Contracting businesses pick up momentum from Q4 2014 and Q1 2015 onwards,” he said,

“We will continue to increase our portfolio, and invest in cutting edge technology in order to expand our global presence by venturing into new markets and creating more opportunities for development across every segment of our business.

 “We remain optimistic on the prospects of the second half of the year across all our markets and we expect to compensate for the shortfalls incurred in Q1 and Q2 as we are well geared to boost our operations and to recover our claims with strong emphasis on improving liquidity and profitability,” he said. - TradeArabia News Service