PC: Gulf News
For the year 2024, the accumulated losses for a prominent construction firm based in UAE, Drake & Scull International, is lowered to 2.08 billion dirhams (approximately $566 million). Such improvement is noteworthy compared to the AED 5.5 billion loss that was reported in previous years. This positive development, according to the company, is a result of a full restructuring, work to bring new equity, as well as continued legal action to recover outstanding receivables.
The profit for Drake & Scull in 2024 reached AED3.76 billion and was a great recovery from the loss of AED 367 million in 2023. The fact that it is also indicative of the company mired in stabilizing its financial position serves to underline that this turnaround is a product of the company’s strategic direction. In addition, the firm also saw its Ehabts (turbulence) Aed 103.7 million representing a 20 per cent increase compared. Aed 86.3 million in the previous year. Furthermore, total assets increased significantly as well to AED 647 million, from AED 315.4 million compared to the previous year, indicating a robust financial position of the company.
This recovery relied on the restructuring process that has been practically going on for six years now. Drake & Scull returned to trading on the Dubai Financial Market in May 2024, after a five-and-a-half-year break from trading. The suspension was due to its inability to pay after writing off debts, legal provisions and bank interests amounting to AED 4.1 billion. At one point, losses at the firm reached AED 5 billion and the firm was on the brink of bankruptcy. Nevertheless, liabilities within the restructuring plan have been written back by AED 3.79 billion, with AED 368 million of liability converted to Mandatory Convertible Sukuks.
Also, the company has increased its liquidity position during the last 12 months through a shares capital issuance in which it raised AED 454 million. The capital influx has played an important part in enhancing its balance sheet and endowing it with the necessary resources to undertake new projects. Chairman of the Board, Sheikh Theyab bin Tahnoun bin Mohammed Al Nahyan, expressed optimism for the company’s future trajectory. He noted that what (the firm) has been able to achieve in this period has been to reduce debt strategically and inject fresh capital, and to do that in a way that enables us to focus on sustainable growth.
By looking ahead, Drake & Scull is well placed to exploit the MENA region as well as emerging opportunities globally. Future revenue growth is being driven by the company’s active work on increasing the pipeline of its infrastructure and construction projects. Drake & Scull’s turnaround has proven that the restructuring strategy has been effective and is a good example of the possibility of a turnaround in the construction sector, in particular in the UAE a country with a highly dynamic market.
Finally, Drake & Scull’s ability to significantly decrease its losses and earn profitability in 2024 solidify its path towards an effective restructuring and concentrate on operational efficiency. The company’s transformation in terms of its enhanced financial aptitudes and strategic war champs biddings depict it as a firm that is certain to write a new chapter for itself in the otherwise competitive construction arena.
