Dubai's Drake & Scull posts narrower Q3 net loss amid cost-cutting
Drake & Scull International (DSI) may sell non-core assets after its loss narrowed in the third quarter as the Dubai-listed contractor continued to cut costs and focused on high-margin business.
The company, which is suffering from a slowing construction market and payment delays, especially in Saudi Arabia, is currently reviewing its operations under a plan to return to profitability.
“We have commenced our financial review to assess our working capital and funding requirements with respect to our individual business units and the company as a whole,” said the chief executive Wael Allan.
“The outcome will necessitate difficult executive decisions. These may include divestments in non-core geographies, retrenching on civil works, mainly in Saudi Arabia, as well as taking a more conservative stance on the recoverability of certain receivables across the business.”
Net loss attributable to equity holders narrowed to Dh46.3 million from Dh877.8m in the year-earlier period. Revenue doubled in the third quarter to Dh868.6m from Dh433.8m as the company focused on high-margin, high-value projects in countries such as the UAE.
The company’s backlog declined 28 per cent in the third quarter to Dh8.8bn due to cancellation of two projects in Saudi Arabia. DSI is avoiding low-performing and volatile projects in Saudi Arabia, particularly due to the financial risks associated with civil works projects in the kingdom.
DSI shares were up 0.68 per cent to Dh0.445 in early morning trading.
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