Emaar’s Q1 profits drop to Dh1.65b

DUBAI — Emaar Properties PJSC yesterday recorded 2008 first quarter profit of Dh1.655 billion, which represents a drop of 3.8 per cent compared to the same 2007 period.

By Issac John (Deputy Business Editor)

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Published: Thu 17 Apr 2008, 11:01 AM

Last updated: Sun 5 Apr 2015, 11:40 AM

Emaar, the largest publicly traded developer in the Middle East and Africa, announced the results after the market closed. Emaar fell about 0.5 per cent to Dh11.1 in Dubai, giving the company a market value of Dh67.6 billion, the largest in the region.

Revenue for the first quarter fell slightly by 0.2 per cent to Dh3.96 billion from Dh3.97 billion last year due to significantly lower land sales in 2008, but despite robust sales in its home market.

Emaar said in a statement that the decline in revenue in the first quarter of 2008 as compared to the revenue of Dh5.141 billion in the fourth quarter of last year is due to decreased revenue from John Laing Homes by Dh 1.2 billion, which is due to cyclical delivery pattern at the US subsidiary. “The fourth quarter 2007 also included income from land sales from our associates in Morocco and India,” it said.

Annualised Earnings per Share (EPS) for the first quarter of 2008 is Dh1.08, which is same as actual EPS of Dh1.08 for the year 2007.

“Despite operating in an extremely challenging global economic environment, Emaar Properties continued to add value to our stakeholders through our focus on geographic expansion and business segmentation. Emaar’s farsighted approach of investing in dynamic emerging markets and our ongoing commitment to creating trend-setting neighbourhoods in Dubai were among the prime drivers of our value creation for our shareholders,” said Mohamed Ali Alabbar, Chairman, Emaar Properties.

“The momentum to the fast growth in the real estate market is maintained with the timely introduction of significant initiatives by the Dubai Government, under the guidance of His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai.

In particular, the introduction of escrow accounts, regulated by the Real Estate Regulatory Agency, a government entity operating under the umbrella of the Dubai Land Department, has further increased investor confidence in this high-growth market,” Alabbar said.

He said Emaar’s focus in the first quarter of 2008 was on consolidating its international operations, as well as on unveiling additional premium residential and commercial property in Dubai to meet growing demand. During the period, customer response to the sale of new apartments in Downtown Burj Dubai was overwhelming. “Downtown Burj Dubai, our Dh73 billion flagship project, has evolved to become the region’s most compelling new lifestyle destination. Three hotels and a shopping mall complement the thriving residential communities in this new neighbourhood, which is anchored by Burj Dubai, already the world’s tallest structure. The Dubai Mall, one of the world’s largest shopping and entertainment destinations, continues to prove a magnet for global investors, and is scheduled for opening on August 28, 2008.”

Analysts at HC Securities Brokerage said a 7.2 per cent increase in the company’s total operating expenses from Dh2.48 billion in 1Q07 to Dh2.66 billion in 1Q08, results in a 12.5 per cent decrease in operating profit, and 4.6 per cent decline in operating margin from 37.5 per cent to 32.9 per cent. The company’s net margin decreased from 43.4 per cent to 41.8 per cent.

They pointed out that the company’s cost of sales increased slightly higher than growth in sales. COGS increased by 1.2 per cent from Dh2.01 billion in 1Q07 to Dh2.03 billion in 1Q08. As a result, the company’s gross profit decreased by 1.6 per cent from Dh1.96 billion (gross margin of 49.4 per cent) to Dh1.93 billion (gross margin of 48.7 per cent).

During the first quarter of 2008, the company had record sales of Dh 5.6 billion in UAE, which is an increase of 20 per cent as compared to sales recorded in the fourth quarter of 2007 of Dh4.681 billion. The investment in resources for hospitality, malls and international businesses continue as Emaar targets to open The Dubai Mall, Dubai Marina Mall and three five star hotels in the third and fourth quarters of 2008.

Securities & Investment Company (SICO) has released an annual update report analysing the 2007 results and SICO’s outlook on Emaar Properties with an “overweight” rating and fair value of Dh18.40 (presenting a 67 per cent upside to its current market price).



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