Middle East Business Review – 9 February

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Etihad Airways announced it has broke even its 2011 target by posting a AED51.4 million ($14 million) profit. The UAE’s flag carrier reported a pre-interest and tax full-year earning of AED503.21 million ($137 million) while generating AED15.06 billion ($4.1 billion) worth revenues, up 36% from year before. “This is an historic day for Etihad and an amazing achievement for an airline just eight years old. Five years ago we said we would be profitable by 2011. Despite the global financial crisis, continued high oil prices, regional instability and natural disasters, we have delivered,” James Hogan, president and chief executive of Etihad, said in a statement.

Meanwhile, Etisalat, the UAE’s largest telecom operator posted a full-year net profit of AED5.8 billion, down from AED7.6 billion previous year. The company said in a statement that its full-year net profits plummeted after India’s Supreme Court ordered the cancellation of licences awarded in the 2008 telecoms auction, translating into losses for a consortium of which Etisalat was a major partner. “In accordance with International Financial Reporting Standards (IFRS), Etisalats management has decided to recognise an impairment charge in its 2011 consolidated financial statements amounting to an aggregate of AED3,044 million (US$829 million) before Federal Royalty against the full carrying value of goodwill, amounting to AED1,227 million, and the net assets including licenses of its Indian operations. The net impact of this charge on our consolidated net profit after Federal Royalty amounts to AED1,020 million (US$278 million),” the statement added.

Dubai’s stock exchange registered a 0.3% rise to 1,487 points, up 9.5% year-to-date and closed at a five-month high, thanks to a spur in real estate-linked stocks. The biggest gainer was Shuaa Capital whose shares jumped 13.5%. The other two big gainers were National Central Cooling Co. (Tabreed) gaining 6.3%, while Arabtec’s shares, accounting for almost 40% of all volume on the Dubai stock market, soared 3%. Abu Dhabi index also made a nominal gain, up 0.1% to close on 2,467 points.

The Department of Economic Development (DED) announced it issued 14,360 business licences last year with professional services and tourism sectors bagging seven and five per cent of the total licences respectively. “Dubai’s strong economic performance is demonstrated by the high number of business licences issued. It also shows the high level of investor confidence in Dubai,” said Sami Al Qamzi, Director General of DED.

According to reports coming from Australia, Sydney International Airport authorities have slapped a fine of $1.1million on Emirates Airline for violating a 11pm-6am flight curfew last month. However, Emirates insisted flight EK413 from Sydney to Dubai on 8 January was delayed due to fuel delivery issues caused by a thunderstorm. A decision was made to continue with operation of the flight to limit the inconvenience to passengers. Only on rare occasions such as this does the airline seek dispensations, and when doing so follows the normal process. We are currently in discussions with the relevant authorities regarding aspects of the curfew regulations and, while these talks are ongoing, we are not in a position to comment further, an Emirates spokesperson confirmed in a statement.

The UAE and Saudi Arabia have assured South Korean President Lee Myung-bak, who is on a visit to the Gulf, they are ready to make up any shortfall amid tightening of sanctions on Iranian oil exports. Reuters quoted sources in Abu Dhabi National Oil Company (Adnoc) as saying the company will supply full contractual crude volumes to Asian importers in March for the first time in almost a year in a bid to plug the gap created by a US-led ban on Iranian oil exports. I believe Saudi Arabia can play a major role in stabilising the global economy, Lee said in a speech. Korea purchased 87% of its oil from the Middle East last year, including 9% from Iran.

Meanwhile, a Reuters investigative report suggested US-led financial sanctions imposed on Iran are hampering Tehran’s ability to buy imports, especially foodstuffs, and receive payments for its oil exports. Reuters quoted Asian traders as saying that Malaysian palm oil export to Iran has stopped due to difficulties in making payments. The Islamic Republic has already defaulted on rice payments to India and halved corn imports from Ukraine in the past few days. The way things are going, I predict that over the next three to four months our edible oil will run out because of sanctions. It is no longer being imported and Iran cannot produce that much, a margarine factory owner in Iran told Reuters on condition of anonymity while expressing dismay at future prospects.

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