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FOCUS ON CORPORATE STRATEGY

Drake & Scull Q1 net profit plunges 61pc

DUBAI, May 15, 2016

Drake & Scull International, a regional market leader in the general contracting and mechanical, electrical and plumbing (MEP) sector, said its net profit for the Q1 plunged 61 per cent to Dh9.8 million ($2.6 million) from last year's Dh27.85 million ($7.58 million).

Announcing the results for the first quarter of the fiscal year ended March 31, 2016, the Dubai contractor said its revenue for the period stood at Dh1.03 billion ($280 million), down seven per cent over Dh1.11 billion ($302 million) last year.

The company’s total backlog stood at Dh11.3 billion as of March 31, 2016, as compared to Dh13.8 billion reported during the same period in 2015 with a significant Dh343 million project award for the Doha Metro Depot and Yards secured by Drake & Scull Rail.

Commenting on the results, Khaldoun Tabari, the chief executive and vice-chairman of Drake & Scull International, said the effects of strategic decisions and unprecedented measures initiated by DSI’s management last year have started to materialise, aand the company continues to make determined efforts to consolidate its businesses in its key markets.

Tabari said he company will continue to focus on the efficient use of of its working capital through financial discipline with an aim to generate free cash flow.

"Our austerity drive, which had been initiated last year in light of the new economic realities of the regional industry, will help us to sustain our efforts to streamline our costs and reduce our overall SG&A (selling, general and adminstrative expenses), which we believe will have a positive impact on our bottom line target this year," he noted.

"Besides our profitability, we remain committed to improving our liquidity, which remains one of the key areas of focus for our corporate strategy for the year," he added.

“We also continue to refine and strengthen our operations and have enhanced our management with the recent appointments of Wael Allan as our first chief operating officer and Kailash Sadangi as our chief financial officer, whose combined experience and expertise will complement and revitalise our operations and enhance the synergy and efficiencies of our business streamlines,” Tabari stated.

On its other units, Tabari said: "Our Rail business continues to gain traction as a result of its strategic alliances with global industry leaders, and is actively engaged with the region’s leading rail network and infrastructure developers."

"The Dh343 million Doha Metro Depot and Yards project win is an indicator of the considerable progress achieved by our Rail business, which we believe is strongly positioned in the industry due to its substantial global rail experience and expertise which bodes well for our prospects of securing major rail development projects in our key markets," he stated.

Tabari said Drake & Scull was cautious about the economic prospects of the region in the short and medium term.

"We believe that our strategic emphasis on the pursuit of high margin business growth potential will be influenced by the future development of the UAE market," he noted.

"The UAE Expo 2020 and Abu Dhabi Vision 2030 will continue to drive infrastructure investment and project announcements and we remain positive about our prospects of securing high margin growth oriented projects for our Engineering and Rail businesses," he added.

Tabari said Saudi Arabia was currently its largest market by backlog and would continue to be a critical market for the group, especially for high margin sectors like its rail business.

"We will be highly selective in developing our presence while prudently consolidating our position in the kingdom’s construction sector. Saudi Arabia’s bold and ambitious Vision 2030 is remarkable for its foresight and the announced reforms will aid the kingdom achieve economic diversification. We are hopeful that the reforms will add positive momentum to the kingdom’s real estate and infrastructure drive in the years ahead," he added.-TradeArabia News Service




Tags: Dubai | Saudi | project | Drake & Scull | rail contracts |

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