By Gavin Davids
Construction firm plans diversification to reduce dependence on Dubai market
Dubai’s Drake and Scull International (DSI) expects revenues to grow by 20-25 percent over the next five years on increased business from Saudi Arabian and Indian markets, Khaldoun Tabari said on Tuesday.
In an interview with Zawya Dow Jones on the sidelines of the Big 5 exhibition, Tabari, the chief executive officer of DSI, said that he expected the firm’s Saudi acquisitions to “surely raise revenues in the coming fiscal quarter.”
Earlier this month, the company announced that it had purchased a 65 percent stake in Drake and Scull International Saudi.
The construction firm plans to move into neighbouring markets like Qatar, Kuwait and Saudi Arabia in an effort to reduce its reliance on the UAE’s second largest emirate.
“We have gone from 90 percent depending on Dubai to now 20 percent depending on Dubai,” Tabari said, adding that the firm was also eying a foothold in Libya in the future.
Real estate prices in Dubai fell by as much as 50 percent from their 2008 levels as it struggled with the impact of the global financial crisis.
Tabari added that DSI was preparing to enter the huge Indian market in the coming year.
“I would say we will really start looking at India starting second quarter next year. We are gathering information now,” he said.
In October, the firm reported that its third quarter net profit had fallen to $9.25m, 44 percent lower than the $16.55m it had reported a year previous. Net profit for the first nine months of 2010 fell from $56.6m in 2009 to $32.67m.
Tabari said that DSI currently has a backlog of projects that amounts to approximately $1.36bn.
“There has been a lull or a delay in the way projects are being performed. We used to take a contract and were expected to execute it within a period of 18 months or 24 months time. Right now the contracts are being given out with a period of 30 to 36 months,” he said.
He added: “So what you might have is that you might have a bigger backlog but you are not going to execute that much of that backlog immediately.”