Lower productivity on major projects, especially those in Saudi Arabia, and exposure to the euro bit hard into profits at Drake & Scull International in the second quarter.
Productivity and euro take toll on Drake & Scull
Lower productivity on major projects, especially those in Saudi Arabia, and exposure to the euro bit hard into profits at Drake & Scull International (DSI) in the second quarter.
Dubai's second-biggest contractor, which specialises in mechanical, engineering and plumbing operations, made a net profit of Dh26.1 million (US$7.1m) compared with Dh51.3m a year earlier.
Revenues for the quarter also declined slightly, to Dh717m, a 3 per cent fall on a year earlier.
Half-year results for the company were also disappointing with a net profit of Dh75m, more than 22 per cent down from a year ago.
In a statement to the Dubai Financial Market, Osama Hamdan, the DSI chief financial officer, blamed "lower productivity on major projects and especially in [Saudi Arabia]" for the drop in second-quarter revenues. "Finance cost from acquisition funding and contracts provisioning continue to hinder profit growth," he said.
"Our exposure to the euro currency through our German subsidiary and the volatile fluctuation in foreign exchange also contributed to the decline."
The company said it was expanding its business into both railway transport and oil and gas.
But its core business would continue to be the main driver of net margin growth, it said.
Gross margins would improve after it finished paying costs related to setting up new offices in Iraq, India and Algeria, it added.
* with Reuters