Dubai Investments sees a rise in first-half profits due to the strong performance of its property portfolio.
Dubai Investments profits up
Dubai Investments, a diversified venture capital and holding company, turned in first-half net profits of Dh1.04 billion (US$281.8mn) yesterday, a rise of more than 29 per cent from the same period last year. Though the company's interests range from glass manufacturing to dairy farming, the positive results were mostly attributable to the strong performance of its property portfolio, which has skyrocketed in value.
"This is better than we expected, and the quality of the earnings were much better than the first half of last year," Khalid Kalban, the chief executive, said yesterday. Total revenues in the first half of the year came to Dh2.66bn. Property sales were the biggest single contributor, accounting for 37 per cent of revenues, or Dh992 million. Receipts from contracts that the company's many subsidiaries have entered into was its second-biggest moneymaker, at Dh886m.
The company also recorded Dh342m in gains on fair valuation of its property holdings, a decline from Dh415m in the same category a year before. Mr Kalban said that a lower contribution of fair valuation to revenues was a positive sign, however, because it meant the company was making more of its money through its business strategies than through the fluctuations of the property market. "It's an excellent indication of the quality of the profits," he said. "You include the land bank in your profit, and it is real profit. But it hasn't been cashed in."
Net profit for the second quarter surged to an even greater degree than first-half profits. In the second quarter, Dubai Investments reported Dh546,525 net profit, up more than 50 per cent from the same quarter last year. Overall, net profits for this year should reach Dh2bn, Mr Kalban said. He expected a particularly strong third quarter, as profits from a number of property sales in the Jebel Ali and Mirdiff sections of Dubai were booked. The company would also book the sale of its private equity unit, called M'Sharie, in a private placement it hopes to wrap up by the end of August. Following the private placement, shares in the firm are expected to be offered to the public.
The results were released after the close of trading on the Dubai Financial Market, where 40 per cent of Dubai Investments' equity is listed. The remainder of the company is owned by a variety of government-owned and government-connected entities. Dubai Investments fully owns 13 different companies and has controlling stakes in eight others, according to Zawya Dow Jones data. These include Dubai Investments Park Development Company, Emirates Glass, Marmum Dairy Farm and Al Taif Investments.
Shares in the company, created in 1995 as a public-private partnership, closed at Dh3.86 yesterday, up 1.85 per cent. Dubai Investments stock has risen 16 per cent in the past year, but is down 1.84 per cent since January. firstname.lastname@example.org