Dubai's Drake & Scull (DSI), a leader in the integrated design, engineering and construction sector, reported a 10 per cent drop in third-quarter profit on Sunday, beating analyst estimates as revenue increased.
The contractor made a net profit attributable to shareholders of Dh21.4 million ($5.83 million) in the three months to September 30, down from Dh23.8 million ($6.47 million) in the year-earlier period, according to a statement to Dubai's bourse.
Analysts polled by Reuters had on average forecast DSI would make a third-quarter profit of Dh16.1 million ($4.38 million).
DSI's third-quarter revenue was Dh1.24 billion ($337 million), up from Dh995 million ($270 million) a year earlier.
The company also announced it had issued a $120 million five-year sukuk via a private placement.-
Commenting on the results, Mukhtar Safi, the chief financial officer, said the third quarter was exceptionally a good one in terms of backlog burn and profitability margins despite the provisions of Dh25 million ($6.8 million) taken against the arbitration case on its legacy contract in the UAE.
"Operating cash flow remains stretched until we finalise our negotiations on the large claim and variations orders with some of our major clients in Saudi Arabia," stated Safi.
"Overall, we have picked up operational momentum in our key markets in the Gulf Cooperation Council (GCC) and particularly in the UAE," he noted.
The UAE contractor said its project awards from Saudi Arabia, UAE, Qatar, Oman, Kuwait, Algeria, Egypt, and India and Europe soared to Dh5.4 billion ($1.46 billion).
The total order backlog reached a record high closing at Dh15.3 billion as of September 30, registering a 24.5 per cent year on year growth.
Saudi Arabia remained the largest market for the group contributing 35 per cent of the backlog. The general contracting and engineering businesses each contributed 48 per cent and 33 per cent respectively, it stated.
DSI's teams in Saudi Arabia achieved major milestones and received payment reassurances towards the completion of this challenging project by the second quarter of 2015, said Safi.
The oil and gas and wastewater and water treatment businesses increased their contribution to 15 per cent and four per cent to the overall backlog driven primarily by operations in the Iraqi and the Egyptian markets and the Indian and the European markets respectively, he added.
According to Safi, the collaborative capabilities of the engineering services (MEP and Water and Power), general contracting, oil and gas, rail and infrastructure development continue to deliver strong performance quality work on project sites.
Armed with a multicultural workforce, inherent financial strength and solid regional experience, the company’s outlook remains positive in terms of realising greater profitability and improving productivity across Middle East aand North Africa (Mena), South Asia and Europe.
