UPDATE 1-Dubai's Drake Q2 profit slumps 49 pct; misses view
* Q2 profit 26.1 mln dirhams vs 51.3 mln dirhams yr-ago
* Contract revenue for Q2 falls to 717.3 million dirhams
* Co says acquisition costs hits profits
* Drake shares fall 3.6 pct on Dubai bourse (Adds details)
DUBAI, Aug 15 (Reuters) - Dubai contractor Drake and Scull posted a 49 percent drop in second-quarter net profit on Wednesday, missing analysts' forecasts, as high financing costs for acquisitions and increased provisions for contracts ate into profits.
The firm, which specialises in mechanical, engineering and plumbing operations, made a second-quarter net profit of 26.1 million dirhams ($7.1 million) compared with 51.3 million dirhams in the same period in 2011, it said in a statement.
The results missed analysts' forecasts who expected a second-quarter net profit of 46.7 million dirhams in a Reuters poll.
Drake shares were down 3.6 percent at 0650 GMT on Dubai's bourse.
The company, which has pushed into other markets like Saudi Arabia and Kuwait following a slowdown in Dubai's real estate sector, blamed expenses from acquisitions and contracts provisioning for the profit drop.
"Finance costs from acquisition funding and contracts provisioning continue to hinder profit growth," said Osama Hamdan, chief financial officer for Drake.
"Our exposure to the euro currency through our German subsidiary and the volatile fluctuations in foreign exchange also contributed to the decline in earnings."
Contract revenue for the quarter fell to 717.3 million dirhams from 738.7 million dirhams in the prior-year period.
Hamdan said revenue in the quarter was impacted by lower productivity on major projects, especially in its key focus market of Saudi Arabia.
Drake secured contracts worth 1.6 billion dirhams year-to-date and has a order backlog of 7.4 billion dirhams at the end of June 30.
The firm said it is expanding into rail and oil & gas and both business units are expected to contribute to the revenue in the second half of the year. ($1 = 3.6730 UAE dirhams) (Reporting by Praveen Menon; Editing by Dinesh Nair)
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