The Dubai-based contractor Drake & Scull International yesterday blamed an increase in administrative expenses for a 41.8 per cent fall in the company's net profits last year.
According to the group's full-year results published yesterday, net profit for the year stood at Dh128 million ($34.8m) a drop from Dh220m in 2011.
Drake & Scull said net margins fell by 38 per cent compared with the previous year - something the company attributed to an increase in expenses related to the launch of its oil and gas and rail divisions, as well as the establishment of new offices in Iraq and Qatar.
Company revenues, however, increased 6.5 per cent to Dh3.3 billion as its businesses in Saudi Arabia and Qatar grew.
Drake & Scull's performance during the final three months of last year showed a significant improvement compared with the previous quarter.
The company said that net profit for the three months to December more than quadrupled compared with the third quarter, rising from Dh8m to Dh46m. Revenues doubled from Dh600m in the third quarter to Dh1.2bn.
"Competition will continue to be a critical challenge to our pricing strategy," said Osama Hamdan, Drake & Scull's chief financial officer. "However, gross margins and net margins across all markets for 2013 are expected to stabilise since the cost of investment in new areas and business streams have been incurred in 2012."
Analysts also remained fairly upbeat about the company.
"The last quarter of 2012 was positive," said Tariq Qaqish, the deputy head of asset management at Al Mal Capital.
"We could be seeing the bottom of the cycle for Drake & Scull and we see more positive news coming this year."