Dubai: Contractor Drake & Scull International (DSI) said on Sunday its net profit jumped 16 per cent to Dh25.2 million in the three months to September on the back of rising revenues.
Revenues in the third quarter also rose by a quarter to Dh1.24 billion.
“Q3 2014 was exceptionally a good quarter in terms of backlog burn and profitability margins despite the provisions of Dh25 million taken against the arbitration case on our legacy contract in the UAE,” Mukhtar Safi, chief financial officer at Drake & Scull, said in a statement.
However, net profit in the nine months to September fell to Dh96.9 million compared to Dh145 million in the year-before period. Revenues were almost flat at Dh3.59 billion.
The company’s total order backlog reached a record high of Dh15.3 billion as of September 30, up 24.5 per cent on year, with 35 per cent of the contracts originating from Saudi Arabia.
The company was awarded Dh5.4 billion worth of projects so far in the calendar year from the GCC including India and Europe.
“Operating cash flow remains stretched until we finalise our negotiations on the large claim and variations orders with some of our major clients in KSA,” Safi said.
“Overall, we have picked up operational momentum in our key markets in the GCC and particularly in the UAE,” he added.
The company’s revenues for the quarter from the Engineering business and the General contracting business also surged 19 per cent and 34 per cent year-on-year respectively.
“The results are better than expected as margins and even revenues are better. We would like to see if this performance sustains in the near term,” said Sanyalaksna Manibhandu, manager of research at National Bank of Abu Dhabi Securities.
The company’s gross margins were placed at 10.9 per cent in the third quarter as against 8.3 per cent in the second quarter.
Sukuk issue
In a separate statement, Drake & Scull said it plans to issue a $120 million sukuk due in November 2019.
“The sukuk transaction is instrumental in improving our capital efficiency to deliver our growing backlog and to cater to our growth trajectory in the GCC, Mena and Asian markets,” Safi said. Emirates NBD Capital Ltd and Mashreqbank PJSC will be the joint cordinators and lead managers for the deal.
The five-year sukuk structured under the Sharia principle of Murabaha, represents the first sukuk based on Murabaha trades of Sharia-compliant certificates on the Nasdaq Dubai Murabaha platform, the company said.
