Dubai-based Emaar Properties, the Middle East's largest publicly traded property developer, saw its third quarter profit fall three per cent from one year earlier as a result of a drop in revenue. Net income fell to Dh1.51 billion (US$411.1 million), or Dh0.25 per share, in the three months ended Sept 30 compared with Dh1.56bn, or Dh0.26 per share, a year earlier. Revenue fell by five per cent - to Dh4.319 - compared with the third quarter of last year, the company said yesterday in a statement on the bourse website.
Higher revenue from its Dubai operations, which account for more than 80 per cent of Emaar's revenue, were offset by a fall in revenue from John Laing Homes, the California-based home builder which the developer acquired for $1.05bn in June 2006 at the peak of the US housing market. Emaar wrote down Dh750m related to John Laing Homes in the third quarter, compared with a write-down of Dh165m in the preceding quarter.
Net profit fell nine per cent in the third quarter compared with the second quarter, and net operating profit increased 36 per cent to Dh2.258bn in the same period. Third quarter revenue was up 1.9 per cent from the second quarter, mainly on domestic property sales. "Overall, people were happy with the results, as they expected some kind of decline in the revenue compared to the second quarter," Ayman al Saheb, the director of operations at Darahem Financial Brokerage, said. "I expected they would have bigger write-downs with regards to the investors in the US, the JL [John Laing] Homes position. But the liquidity crunch happened towards the end of the third quarter. So I believe that the fourth quarter will show the proper impact, if any, on the company with regards to what's happening on a global basis."
"Barring write-downs, Emaar earnings are pretty impressive," Robert Mckinnon, the managing director of equity research at Al Mal Capital PSC, told Bloomberg. "Going forward it'll be a tough operating environment for real-estate companies although Emaar may weather it by enhancing its recurring revenue in Dubai." Another issue concerning Emaar is the company's expected share-buyback scheme that it announced in September. Emaar said it would begin to buy back its shares three days after its third quarter disclosure was issued yesterday.
The company's share price has fallen 62.7 per cent year this year. Its stock dropped more than 28 per cent this month alone. Emaar's chairman, Mohammed Ali Alabbar, said he was "very confident" of the company's fundamentals and future growth. The company's projects in Dubai include six hotels, a theme park and 1,200 apartments as part of the Las Vegas-style Bawadi project in the desert outside the city.
Emaar Properties, whose portfolio is estimated to be worth Dh367bn, is less than a year away from completing the Burj Dubai tower, which was officially recognised as the world's tallest building this September. In domestic operations, a highlight of Emaar's expansion was the completion of The Address in the downtown Burj Dubai area, the first hotel under The Address Hotels & Resorts brand owned and operated by Emaar Hospitality Group. Emaar is also developing The Dubai Mall, which will become the world's largest shopping and entertainment mall when it opens on Oct 30.
ngillet@thenational.ae
