- Construction firm will sell "non-core" assets to generate cash
- Makes provisions, revenue adjustments for uncertified work
Drake & Scull International PJSC, a Dubai-based engineering and construction company, reported its first quarterly loss and said it’s planning to sell non-core assets and cut cost to generate cash. The shares slid to a record low.
The company posted an 877.8 million-dirham ($239 million) attributable net loss in the three months through September, compared with profit of 21.4 million dirhams a year earlier, it said in statement Sunday to the Dubai stock market. The mean estimate of three analysts was for profit of 16.2 million dirhams.
Drake & Scull joins larger rival Arabtec Holding Co. in reporting losses because of “challenging market conditions.” The company said it made one-off provisions and revenue adjustments after the decline in oil prices caused developers and clients to defer payments and delay projects across several markets.
Drake & Scull shares fell 10 percent to 41 fils, the lowest on record since the company’s initial public offering in 2009. The drop was the biggest since December 2014.
Contract revenue slumped to 434 million dirhams from 1.24 billion dirhams in the year earlier period. Drake & Scull also reported third-quarter provisions, revenue and gross profit adjustments of 984 million dirhams, with a total order backlog of 12.35 billion dirhams.
"The Company has initiated a cost-cutting program to improve operational efficiency and reduce SG&A.,” it said, referring to expenses. “The company is also taking a number of measures to boost working capital, reduce debt levels and improve the capital structure by selling non-core assets to generate cash and improve liquidity."
Drake & Scull has taken number of one-off provisions related to ongoing arbitration, legal cases in United Arab Emirates and Saudi Arabia. It also made revenue and gross profit adjustments for “uncertified variations” across several major projects in Gulf.