Company Profile - Drake & Scull International - Q1 2013


SWOT Analysis

Strengths

  • IWP and Drake & Scull Water and Power opens access to state-backed utilities infrastructure projects.

  • Expansion in Saudi Arabia and Qatar exposes the company to high growth markets.

  • Nature of its business gives the company greater flexibility to respond to the market conditions compared to construction companies tied to delivery of major projects.

Weaknesses

  • Heavily exposed to the UAE residential and commercial construction sector.

Opportunities

  • Long-term growth opportunities in Egypt and Saudi Arabia.

  • Lower raw material prices.

  • Abu Dhabi's 2030 Vision programme underpins long-term infrastructure investment growth.

Threats

  • Major projects in Dubai scaled down or halted.

  • Confidence remains shaken in the region's residential and commercial construction sector.

Company Overview

Drake & Scull International (DSI) is a UAE-based engineering and auxiliary services provider focusing on the areas of mechanical electrical and plumbing (MEP), civil works and infrastructure, water and power (IWP). As a project manager and services provider of major civil and construction projects, DSI covers the entire value chain of a project from design to commissioning. The company operates through nine subsidiaries, each specializing in a country or segment.

DSI's main base of operations is in the UAE, but has established businesses in Qatar, Saudi Arabia, Kuwait and Eqypt, and has participated in projects throughout the Middle East and North Africa (MENA) region and Asia (Thailand).

Strategy

The cornerstone of the company's growth strategy has been geographic diversification, primarily in the MENA region, but also further afield in Asia and Europe. The collapse of the Dubai property market (and subsequent contraction in property construction) provided new impetus to the company's geographic diversification strategy.

BMI notes that the Saudi construction industry is a key focus for the UAE-based firm as it actively seeks to diversify away from its subdued domestic market. Through its wholly owned subsidiary Drake and Scull Construction Saudi Arabia (DSC KSA), the company has been consolidating its presence in the Saudi Arabian market.

DSI's growing presence in Saudi Arabia has received a further boost after the company secured a contract from Saudi Aramco for the US$533mn King Abdullah Petroleum Studies and Research Centre (KAPSARC) in Riyadh.

DSI made it public in 2010 that it was seeking opportunities in India and has been in talks with potential partners in the country, having stated its ambition to establish a presence through non-organic growth. The recent announcement that the company's board has approved a new unit in India is therefore an important first step towards establishing a presence in a country where entry for foreign firms can still be problematic. While it is so far unclear under what circumstances this new unit will be established, BMI continues to highlight the importance of seeking a local partner when entering the Indian market

Financial Data

DSI announced a net profit of AED220mn (US$59.89mn) during 2011, reports Gulf News. This represented a 36% increase from 2010, while the company's total revenue also rose by 68% to AED3.11bn (US$847mn). DSI CEO Khaldoun Tabari said that the company intended to sustain its growth in the Middle East and North Africa region during 2012, whilst also expanding further in Asia.

This article is tagged to:
Sector: Infrastructure
Geography: United Arab Emirates