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Abu Dhabi, UAEMonday 18 June 2018

Damac's Q3 profits down 20% as cost of sales soar

Revenues beat estimates but domestic sales slip

Damac reports a drop in profit for the third quarter after the cost of sales skyrocket. Antonie Robertson / The National
Damac reports a drop in profit for the third quarter after the cost of sales skyrocket. Antonie Robertson / The National

Profit for Damac Properties, the Dubai real estate developer and operator of the emirate’s Trump International Golf Club, dropped 20 per cent in the third quarter, coming in below an analyst estimate, as the cost of sales leapt 70 per cent.

The developer reported a net profit of Dh719 million for the three months to September 30, down from Dh902m a year earlier. The figure came in below an estimate of Dh780m from EFG-Hermes.

Damac’s revenue rose by 30 per cent to Dh2.29 billion for the quarter, coming in ahead of EFG’s estimate of Dh1.8bn, helped by a surge in international sales to nearly Dh1bn from Dh20m in the same period last year.

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However, sales in the UAE declined by a quarter to Dh1.3bn as Dubai’s property market remains sluggish.

“Dubai’s property market has been steadily solidifying in 2017, with increasing sales transactions and robust fundamentals, and our medium to long-term outlook remains positive,” said Hussain Sajwani, the chairman of Damac Properties.

“We have a strong value proposition and continue to appeal to a broader spectrum of buyers with a range of products at attractive price points.”

The developer awarded a Dh628m contract in August to build about 1,300 villas within its Akoya Oxygen cluster to Arabtec Construction. Damac said at the time that deliveries on the clusters would start from the second half of 2018 and run through to 2022.

Damac shares ended the day unchanged at Dh3.95.

Fellow Dubai property firm Deyaar Development on Tuesday posted a 40 per cent fall in profit for the first nine months of the year, as the company wrote back provision for impairment of investment in an associate and recorded fair valuation gain on investment properties for the corresponding period last year.