Abu Dhabi, UAEThursday 17 October 2019

Dubai's UPP first-quarter profit drops on investment losses

A rise in finance costs during the period also dented earnings

Union Properties on Thursday posted a loss in its first-quarter 2019 net icome. Antonie Robertson / The National
Union Properties on Thursday posted a loss in its first-quarter 2019 net icome. Antonie Robertson / The National

Dubai based Union Properties reported about a 99 per cent drop in profit as financing costs rose and losses on investments dented income amid ongoing restructuring of its business.

The net profit attributed to the shareholders of the company for the first three months of 2019, dropped to Dh1.7 million, the company said in a statement to the Dubai Financial Market, where its shares trade.

Finance cost at the end of March climbed to Dh39.7m from Dh22m reported for the same period of 2018, it added.

The company reported a loss of Dh23.1m on its investments in the first three months of 2019, against a profit of Dh83.9m in the same period a year-earlier.

Union Properties, during the reporting period, “sold investments in funds and invested in various listed equity investments, having a fair value of Dh272.4m …. [which] resulted in a net loss on change in fair value”, the company said.

Stocks markets across the region are witnessing lack-luster trading, amid volatility in the oil prices and weak economic backdrop since the beginning of this year. Dubai Financial Market General Index, the benchmark gauges for the emirate’s equities, has remained broadly flat so far this year, while Union Properties' share price has declined almost 22 per cent over the same period.

Union Properties has struggled to maintain growth in profitability in the wake of a softening real estate market in the UAE. The company, in the second quarter of 2017, posted its biggest-ever quarterly loss of Dh2.3 billion after a Dh2.8bn write-down of asset value by its management team. However, it turned to profit at the end of 2018.

Union Properties is responsible for projects such as Index Tower, UP Tower and Motor City master planned development, among others in Dubai. It is also looking to diversify income streams, expand footprint outside home market and enter new business lines to boost revenues.

Updated: May 16, 2019 03:34 PM