Story:?Emaar Q2 profit misses estimates, reports 69% plunge
Building the world?s tallest structure, the Burj Khalifa, Emaar Properties remains the Arab world?s biggest listed developer.?It is the UAE?s largest developer by market value, and the builder of several prominent properties around the world. It has a collective presence in?several markets spanning the Middle?East, North Africa, Pan-Asia, Europe and North America. The company has established operations in the United Arab Emirates, Saudi Arabia, Syria, Jordan, Lebanon, Egypt, Morocco,?India, Pakistan, Turkey, China, USA, Canada and United Kingdom.
However, Emaar had suffered as the UAE?s once-thriving real estate sector grind to a halt with property prices slumping and developers scaling back projects.
Second quarter slump –
In announcing their second quarter results, Emaar reported a 69-percent plunge in second-quarter net profit on Tuesday, missing estimates, as it handed over fewer homes and wrote off its investments in Dubai Bank.
Net profit for the first six months of 2011 fell 49 percent to 843 million dirhams, Emaar said.
The property magnate made a net profit of 250 million dirhams ($68.1 million) for the quarter ended June 30, compared with a profit of 801.9 million dirhams in the same period a year ago.
Analysts polled by Reuters on average expected the firm to post a quarterly net profit of 358.18 million dirhams.
Emaar handed over around 244 units during the second quarter, down from 612 units in the same period last year, it said in a statement on Dubai?s bourse website.
This was also down from 270 handed over in the first quarter of this year.
Emaar, which has set up a core team for a strategic review of its operations, said revenues in the second quarter fell to 2.03 billion dirhams, a drop of 23 percent.
The developer wrote off its investment in Dubai Bank, valued at 172 million dirhams it said in the statement. Dubai government announced in May that it would take over the troubled lender.
Emaar?s shares closed 0.3 percent lower on the Dubai bourse before the results were announced. The shares have fallen 19 percent year-to-date.
House prices in Dubai will fall another 10 percent, a deepening a three-year rout to nearly 60 percent from its peak, a Reuters poll showed earlier in July.
Emaar’s business subsidiaries contributed significantly to the company’s revenue stream with the shopping malls & retail business continuing with the strong growth trends as seen during the first quarter of the year.
Commenting on the financial performance in the first half of 2011, Mohamed Alabbar, Chairman, Emaar Properties, said it was marked by continued deliveries of homes and offices in Downtown Dubai and sustained growth by the company?s hospitality & leisure and shopping malls & retail businesses. ?Emaar is now?embarking on a new phase of growth with a core management team in place to roll out a five-year corporate strategic action plan for driving long-term value creation.
“Having redefined the property landscape of Dubai through our fully established master-planned communities, Emaar?s current focus is on identifying and strengthening our operations by taking into account the current social, economic and political changes across all our key markets,? said Alabbar.
?Our approach is underlined by two goals: adding value to our stakeholders, and serving as a catalyst for positive change across the economies we serve by creating new jobs for youth and supporting the economic diversification goals of governments,? he said.
Emaar said its growth initiatives would continue to be aligned with the diversified economic growth model of Dubai.? The Economic City, the Tadawul-listed entity in which Emaar Properties is a key stakeholder, is progressing with the King Abdullah Economic City, the largest of its kind private-sector development in the region.
Having weathered the financial crisis of 2009-10 swiftly, Emaar’s performance will bounce back in no time. It will stay on top of the league with various projects lined up and subsequently retain the ‘largest’ property developer title.
Sources: kippreport, khaleejtimes, emaar, arabianbusiness