Drake & Scull’s Full-Year Profit Tumbles 34% on Saudi Delays

Drake & Scull International PJSC’s full-year profit slid, missing analysts’ estimates, with the Dubai-based construction company citing delays in the execution of projects in Saudi Arabia. The shares declined.

Net income fell to 110 million dirhams ($30 million), the company said in a statement to Dubai’s stock market without specifying whether the profit was after or before minority interests. That’s a 34 percent slump from the 166.5 million dirhams reported for the year-earlier period, according to data compiled by Bloomberg. The mean estimate of nine analysts was for a profit of 165.9 million dirhams, the data show.

Drake & Scull was hurt by contracting delays in Saudi Arabia and by “receivables provisions” in the United Arab Emirates, “which affected the overall operating and net margins of the group,” the company said in the statement. In the second half of the year the region experienced “unforeseen global economic challenges and uneven geopolitical developments that had a far reaching effect on the region’s economy.”

Oil prices collapsed since OPEC, led by Saudi Arabia, decided to maintain its output target in November. Brent crude, which has averaged $101 a barrel since the end of 2009, was at about $61.5 at the end of last week. The six-nation Gulf Cooperation Council, which includes Saudi Arabia, the U.A.E. and Qatar, is home to about a third of the world’s proven oil reserves. Governments in the region rely on crude revenue to fund their budgets and pay for construction projects.

“The economic scenario in our region underwent a rapid change in the last few months,” Chief Executive Officer Khaldoun Tabari said in the statement. “A cautious sentiment in the real estate sector has led developers to become more price conscious, which has lengthened the project development cycle in all our key markets.”

Drake & Scull’s order backlog climbed 20 percent to 14.4 billion dirhams. Saudi Arabia and the U.A.E. are the largest markets for the company, comprising 34 percent and 18 percent of backlog respectively.

The shares fell 1.1 percent to 81.3 fils at the close in Dubai. They have slid 9.2 percent this year compared with a 5 percent gain for Dubai’s benchmark stock index.

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