Business | Investment

Mubadala profit declines to Dh1.1 billion

Total assets increase 14% to Dh101.5b as revenue rises 22% year-on-year

  • By Samia Badih, Staff Reporter
  • Published: 00:00 March 25, 2011
  • Gulf News

  • Image Credit: Supplied
  • Some of the Mubadala portfolio of securities which are strategic in nature are hedged with futures contract at a specific price

Abu Dhabi: Mubadala Development Co., an Abu Dhabi government-owned investment company, yesterday reported Dh1.1 billion, net profits and a decline in comprehensive income to Dh315 million in 2010 due to "mark-to market investments", the company said in an e-mailed statement yesterday.

This marks a 76 per cent decrease in net profits from Dh4.6 billion the year before.

Some of the Mubadala portfolio of securities which are strategic in nature are hedged with futures contract at a specific price. These securities value may have increased or decreased over the course of the year. Mark-to market losses indicates that the selling price of securities have declined below their prespecified contract price, an analyst said.

"The strength of our operations underpinned Mubadala's financial performance," said Mubadala's Chief Executive Officer and Managing Director Khaldoon Khalifa Al Mubarak in a statement.

Total assets increased by 14 per cent to Dh101.5 billion and revenue increased 22 per cent year-on-year from Dh13.1 billion to Dh16 billion, which Mubadala said was largely driven by the "strong performance in the aerospace, infrastructure and oil and gas business."

"The increase in revenue year-on-year was largely driven by the strong performance in the aerospace, infrastructure and oil and gas businesses which all realised significant growth in their operating income," the statement said. A Frost and Sullivan analyst told Gulf News, "Assets bases crossing the Dh100 billion mark is an excellent achievement for Mubadala. It is continuing its commitment to diversify its revenues from hydrocarbons by investing in infrastructure, and aerospace.

Volatility

"The contribution of oil and gas to total revenues was 38 per cent in 2010 against 81 per cent in 2008. Short and medium term volatility in equity markets may negatively impact the mark-to-market securities which in turn reduces the comprehensive income.

"However, with the growing asset diversified base the volatility of our profit and total comprehensive income is marginally expected to decline.

"Transfer of ownership of Advanced Technology Investment Co. (ATIC) to Mubadala reinforces the commitment of the Government of Abu Dhabi to Mubadala. Strong profitability in the operating profit in oil and gas and aerospace segment is partly offset by operating loss in real estate and hospitality segment and Information Communication and technology segment."

Financial returns

Since its inception, the unlisted investment company has been working for the economic diversification of the emirate of Abu Dhabi, generating sustainable financial returns from sectors other than oil and gas.

"Over the last two years we have significantly reduced the contribution of oil and gas to our revenues," a spokesperson from Mubadala said. "In 2008, oil and gas contributed 81 per cent of total revenues compared to 2010 when oil and gas contributed 38 per cent of total revenues. This year aerospace accounted for 31 per cent of total revenues while our Infrastructure Unit accounted for 22 per cent. These changes show progress and moving forward we will continue diversity our revenue streams," the spokesperson said.

It holds stakes in Advanced Micro Devices Inc, General Electric and private equity firm Carlyle, and also owns stakes in local companies including developer Aldar Properties and cooling firm Tabreed.

"Strong profitability in the operating profit in oil and gas and aerospace segment is partly offset by operating loss in real estate and hospitality segment and Information Communication and technology segment. However, the overall decline in profitability is attributable more to the losses in derivatives," the analyst said.

Highlights of 2010

  •  Emirates Aluminium (Emal) reached its full phase 1 production capacity of 742,500 tonnes.
  •  Paris Sorbonne University Abu Dhabi Phase 2 was completed in August.
  •  Strata's Al Ain plant was completed in August after less than one year in construction, delivering its first aerostructure product for the Airbus A330/340 to FACC in Austria.
  •  Lockheed Martin acquired an equity stake in the Advanced Military Maintenance Repair and Overhaul Center (AMMROC), joining shareholders Sikorsky Aerospace Services, which owns an equivalent share, and Abu Dhabi Aircraft Technologies, the principal shareholder and a wholly owned Mubadala company.
  • Mubadala sold four land plots of approximate 17,000 square metres on Sowwah Island to Taiwan's real estate development and construction company, the Farglory Group. It is the first investment by an international developer in Sowwah Island.
  •  Mubadala Healthcare, the company's health care division, had its first profitable year in 2010.

Source: Mubadala

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