Exposure to the Euro currency through German subsidiary also contributes to decline, CEO says
Drake and Scull International, the UAE based construction group, reported on Wednesday that it had achieved total revenues of $381.1m for the first half of 2012, while net profits came to $20.4m.
This represented a top line growth of 8.3% and a bottom line contraction of 29% in comparison to the first half of 2011, officials said. However, the company has secured contracts worth $435.6m which will guarantee a steady revenue stream in the second half of the year.
In addition, the company said that as of June 30, 2012, its order backlog of $2.01bn was sustained.
“We have managed to report profits and higher revenue growth for the first half of the year despite challenging market conditions and in comparison to the first half of 2011,” said Osama Hamdan, CEO of Drake and Scull International.
“Lower productivity on major projects and especially in KSA contributed to the decrease in revenues in Q2. Finance cost from acquisition funding and contracts provisioning continue to hinder profit growth,” he added.
For the second quarter of 2012, the company recorded a net profit of $8.7m and $195.2m in revenues. The quarterly figures indicate a 3% decline in revenues and a 42% drop in net earnings compared to the corresponding period on 2011.
Hamdan added that the company had secured projects in Abu Dhabi, Dubai and Oman during the quarter, valued at $175m.
He added that DSI’s exposure to the Euro currency through its German subsidiary also contributed to a decline in earnings, with volatile fluctuations in the exchange rate the root cause of the problem.
“Overall, revenue growth for H1 indicates an improvement in operational efficiency, the focus in the second half will be to improve profitability and achieve higher earnings,” Hamdan said.