Dubai's Drake & Scull posts narrower Q3 net loss

Drake & Scull said it appointed a financial adviser in the third quarter to assist in a number of business transformation and strategic initiative
Dubai's Drake & Scull posts narrower Q3 net loss
By Reuters
Mon 14 Nov 2016 11:44 AM

Dubai construction firm Drake & Scull reported a narrower third-quarter net loss on Monday, partly because of cost-cutting.

The firm made a 46.3 million dirham ($12.6 million) loss in the three months to Sept. 30 compared with a 877.8 million dirham loss in the year-ago period, according to a bourse statement.

Construction companies have been struggling with a difficult industry environment as Gulf economies slow and governments restrain spending because of low oil prices, leading to projects being halted and payments being delayed.

In a sign of continuing pressures, Drake & Scull said it appointed a financial adviser in the third quarter to assist in a number of business transformation and strategic initiatives.

The unidentified adviser would help DSI to address "challenges the group is facing in its key markets", Chief Financial Officer Kailash Sadangi said in a bourse statement.

Recently appointed Chief Executive Wael Allan said the company has begun a financial review of the business and that it could "necessitate difficult executive decisions".

These could include a withdrawal from non-core markets, retrenching on civil works in Saudi Arabia and a more conservative stance on recovering certain receivables.

DSI has made significant provisions in recent quarters for non-payment of dues, including a large impairment on its Saudi business in the third quarter of last year.

This has weighed on its profitability, with the company reporting worsening earnings in nine of the preceding ten quarters.

By not repeating the large Saudi impairment from a year earlier, as well as doubling its contract revenue to 868.5 million dirhams ($236.5 million) and continuing its "relentless" cost-cutting programme, the company managed to arrest some of the damage in the three months to Sept. 30.

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