Dubai-based Drake & Scull, a specialist in MEP operations, recorded a net profit of Dh32 million ($8.7 million) for the second quarter (Q2) of the year, marking a 42 per cent drop in net earnings compared to Q2 2011.

It also reported Dh717 million in revenues for Q2, marking a 3 per cent decline in revenues against the same period last year.

The company saw total revenues of Dh1.494 billion and net profits of Dh75 million for the first half of 2012 representing a top line growth of 8.3 per cent and a bottom line contraction of 29 per cent in comparison to the first half of 2011.

Year to date DSI secured contracts worth Dh1.6 billion which will guarantee a steady revenue stream for the company in the second half of the year, it said in a statement.

The company managed to sustain its order backlog at Dh7.4 billion recorded as of June 30, it added.

Earnings per share (EPS) were Dh0.012 compared with Dh0.024 recorded during the same period last year.

Project awards for the quarter reached Dh646 million secured in Abu Dhabi, Dubai and Oman.

Osama Hamdan, CFO of DSI said, “We have managed to report profits and higher revenue growth in the first half of the year despite challenging market conditions and in comparison to the first half of 2011.”

“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.

“Our exposure to the Euro currency through our German Subsidiary and the volatile fluctuation in foreign exchange also contributed to the decline in earnings. Overall revenue growth for H1 indicates the improvement in operational efficiency, the focus in the second half will be to improve profitability and achieve higher earnings.”

The MEP business will continue to be the main driver of net margin growth while gross margins are expected to improve after all directs expenses related to the establishment of news offices in Iraq, India and Algeria are completely rendered and incurred, he added.

“The company continues successfully in reducing its receivables through improved collections during the quarter. Contract provisioning is also expected to be extended to the second half of the year which is normal due the cyclical nature of the construction business in the region. However, the productivity on major projects across the region is expected to improve,” Hamdan concluded. – TradeArabia News Service