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Sorouh’s Profit Falls to Dh495 Million in 2009

ABU DHABI - Sorouh Real Estate, Abu Dhabi’s second-largest developer by market value, posted on Thursday a net profit of Dh495 million for the financial year 2009, representing a massive drop from the Dh1.8 billion profit it had made in the previous year.

Revenue also came down to Dh3.1 billion from Dh3.7 billion in 2008, the company said in a statement.

The company’s revenue in the fourth quarter of 2009 stood at Dh438 million, mainly driven by sale of 643,000 square meters of land at Al Gadheer, a development at Saih As Sidirah located at Dubai-Abu Dhabi border. The land was sold to Al Sdeirah Real Estate Investment in which Sorouh holds a 30-per cent stake.

Despite this sale the revenue of the company in the fourth quarter of 2009 was lower than the figure of Dh532 million in the same period of 2008. The sale, however, which fetched a profit of Dh293 million helped the company push up its operating profit in the fourth quarter of 2009 to Dh333 million. This is 60 per cent up from Dh208 million posted in the same period of the previous year, the company said.

Richard Amos, Chief Financial Officer of the company told Khaleej Times that higher margins in some of the sales had helped the company to post higher profits.

The net profit of the company for the last quarter was still down to Dh28.1 million compared with Dh46.4 million recorded in the corresponding period of the previous year. This decline was on account of a decision to increase provisions to Dh242 million and by the loss of Dh51 million from investment in shares of associates companies Aseel Finance, Green Emirates Properties and Al Maabar International Investment.

“We have made provisions for a host of items including for the projects that we may take up in future and for the delayed payments from the property buyers. On the whole overdue payments account for 12 per cent of the total installment payments to be received by us. But we are working closely with those customers to clear up the dues. They have already paid up about 60 per cent of the prices, and are unlikely to dropout completely, though there may be some delays in their installment payments,’’ Mr Amos said.

Earning per share for Sorouh was 19 fils in 2009 compared to 74 fils in 2008.

1100 units to be delivered

Replying to questions Mr Amos said Sorouh will deliver 1100 property units this year. “We have a very strong balance sheet and all our current development projects are on track. Sun and Sky Tower at the entrance to Shams Abu Dhabi on Al Reem Island remain on track for delivery in mid-2010. ‘’

Asked whether the company was planning any lay-offs this year, he said, “We are now at the right size to implement the projects on hand. We have had to retrench some people in 2009 as part of our cost cutting measures. But we don’t have to do that anymore.’’

“We are approaching 2010 with cautious optimism..., cautious because of the uncertain market conditions, and optimistic because of the deliveries of units that are fast approaching,’’ Mr Amos said.

ramavarman@khaleejtimes.com