Emaar net profit rises to Dh3.3b

DUBAI — Emaar Properties, the largest property developer in the Arab world by market value, has recorded a seven per cent increase in half-yearly net profits, despite rising costs.

By Lucia Dore (Assistant Editor, Business)

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Tue 17 Jul 2007, 9:16 AM

Last updated: Sat 4 Apr 2015, 10:21 PM

Net profits reached Dh3.279 billion ($0.893 billion), up from Dh3.053 billion ($0.831 billion) for the first half of 2006. And net profit for the second quarter of 2007 (April to June) reached Dh1.558 billion ($0.424 billion) against second quarter profits in 2006 of Dh1.536 billion ($0.418 billion).

However, quarterly profits growth failed to meet analysts' expectations. According to a Reuters' survey conducted last month analysts' forecasts ranged from Dh1.79 billion to Dh1.98 billion.

Revenue for the first six months of the year grew 59 per cent from Dh5.079 billion ($1.383 billion) in the first half of 2006 to Dh8.078 billion ($2.199 billion), with growth attributed principally to the sale of apartments and villas in Dubai. Revenue for the second quarter of 2007 (April to June) was Dh4.174 billion ($1.136 billion), a 47 per cent increase over 2006 second quarter revenue.

Costs for the half-year ended on June 30, 2007, however, were up 142 per cent on the same period in 2006 as the developer continued to expand aggressively overseas.

This increase is largely a result of an increase in selling, marketing, general and administration expenses which shot up 90 per cent over the half-year and by over 52 per cent over the quarter.

Ahmed Badr, a financial analyst at HC Brokerage in Dubai, said that most of the increased costs could be attributed to Emaar establishing its joint ventures and new companies overseas. "The costs in the international operations are higher because Emaar is well established in the UAE," he said. Badr also said: "Gross margins decreased because of lower land sales in the second quarter."

Total sales contributed only six per cent to revenues in the second quarter, compared to 22 per cent in the first quarter, he explained.

"Emaar chooses to develop the land rather than selling it as is, because this is more profitable to the company in the long-term," he added.

Earnings Per Share (EPS) for the first six months of the year was Dh0.54 compared to the actual EPS of Dh0.50 for the first six months of the year 2006.

Among its recent activities, Emaar acquired total ownership of its subsidiary in Egypt, Emaar Misr for Development.

In India, its joint venture company Emaar-MGF is pushing ahead with plans for an IPO and the company has also formed an equal partnership joint venture with Australia's largest project development and contracting group, Leighton Asia Southern.

More news from