Drake & Scull International (DSI) fell to a deeper loss in the third quarter of 2017 due to liquidity constraints amid the MEP contractor’s ongoing financial restructuring.
The net loss of AED 359mn ($97.7mn) was more than four times bigger than the AED 81mn deficit booked for the third quarter of 2016.
Third quarter revenue fell by around a third to AED 590.3mn from AED 868.6mn in Q3 2016, DSI revealed in a statement to the Dubai Financial Market (DFM).
The lack of liquidity prior to the completion of the recent recapitalization program and the equity injection by Tabarak Investment impacted the overall productivity of ongoing projects, DSI said.
Consequently, additional provisions, revenue, and margin adjustments were recorded across several markets resulting in the net loss.
The ongoing projects portfolio in the UAE remains robust and continues to be the main revenue driver, with the debt restructuring positively progressing in the local market.
The debt restructuring effort is expected to conclude across key markets in the fourth quarter of 2017, enabling the group to secure its funding requirements and to move forward with its turnaround plan.
Furthermore, the company revealed that the UAE project tenders in advance stages of negotiations are expected to materialize in Q4 2017.
DSI says its new leadership team continues to review projects and identify pertinent risks to mitigate its exposure on the operating and financial performance of the group.
The move represents another essential step in DSI’s operational restructuring, which will set the stage for improved and consistent performance in the coming quarters.
Rabih Abou Diwan, Investor Relations Director of Drake & Scull International said: “We expect our financial performance to normalize in the fiscal year 2018 in line with our continued pursuit of restructuring and reinforcing our operations.
“Our primary objective is to strengthen our financial position, to accelerate projects delivery and to improve the operational performance across all sectors.
“For the fourth quarter of 2017, we are confident that our performance will improve as we steam ahead with our restructuring program.
“We reassure our shareholders that we are on the right track to restore our leadership position in the mechanical, electrical, and plumbing (MEP) sector as the new board of directors remains fully committed to stabilizing the business and reinstating our trajectory for profitability and growth.”