Delays in collections and cautious sentiment in regional property market blamed for drop
The Dubai-listed contractor Drake & Scull has posted a 70% lower profit for the last quarter of 2014, weighed by a slowdown in collections and cautious sentiment in the regional property market.
The contractor made $3.54 million in the period, a drop from $11.65 million during the same period the previous year, falling well below analyst expectations, according to Reuters calculations.
The firm said in a statement that it had a record high order backlog of Dh14.4 billion ($3.92 billion) in 2014, a 20% rise on last year, with the Saudi Arabian and UAE markets being the largest contributors.
Delays in the Saudi Arabian market and UAE receivables impacted profitability over the year as a whole, the firm said.
“The economic scenario in our region underwent a rapid change in the last few months which has had an impact on the regional construction industry,” said Khaldoun Tabari, chief executive of Drake & Scull International (DSI).
“A cautious sentiment in the real estate sector has led developers to become more price conscious, which has lengthened the project development cycle in all our key markets. This has resulted in delays in our collections which created a slowdown in our revenue generation. The impact of this also affected our profitability margins.”
DSI reported “flat” revenues of $1.31 billion and a net profit $30 million for the year. It won projects worth $1.45 billion during 2014, the firm said.