Emaar net profit down 3.2% in first nine months of 2008

Dubai: Emaar Properties on Sunday reported Dh1.51 billion net profit for the third quarter of this year, down 3.2 per cent from Dh1.56 billion for the same period last year.

The company posted Dh12.52 billion revenue and net operating profit of Dh5.57 billion for the first nine months of this year.

The nine-month revenue figure is similar to the Dh12.72 billion reported during the first nine months of last year as higher revenues from the Dubai operations were offset by decreased revenue from John Laing Homes, a US company Emaar acquired in 2006.

The company's net operating profit is higher by 15 per cent as compared to Dh4.83 billion for the same period last year.

Adverse effect

Emaar attributed the lower net profit for the first nine months of the year to a Dh750-million write off related to the acquisition of John Laing in the US. John Laing's performance was adversely affected by the US mortgage crisis. Emaar bought John Laing for $1.05 billion in June 2006.

"Overall Emaar's performance is positive. If not for the huge write off it would have made a big difference to the net profits. It is a good sign that despite the difficult economic situation around the world the company has delivered such result," said Shiv Prakash, Equity Investment Analyst - Technical with Mac Capital Advisors.

"Although, the recent actions by the US Government may result in providing support to home builders in the US, the write off was considered prudent in view of the current challenging times for all businesses especially the financial and real estate sector in the US," the company said in a statement.

It said on Sunday that the third quarter revenue of Dh4.319 billion this year is in line with the second quarter's Dh4.240-billion. Earnings per share (EPS) for the first nine months of this year is Dh0.79 with annualised earning at Dh1.05.

"We believe that the economic fundamentals in the Middle East, North Africa and South Asia region will remain sound with higher economic and population growths, resulting in domestic demand to further enable growth in the real estate sector," said Mohammad Al Abbar, the Chairman of Emaar Properties.

Shares of Emaar were battered during the global market meltdown this month, falling more than 28 per cent. The stock gained 0.72 per cent yesterday. The results were released after the close of trading.

Last month Emaar announced a potential buyback of up to 10 per cent of its shares. It is widely anticipated that the company would start the buyback sometime this month. "We are very confident of our company's fundamentals and future growth, which is reflected in our decision to pursue the share buy-back," said Al Abbar.

Currently the company has projects valued at more than Dh367 billion. Emaar gained from international markets such as Saudi Arabia, where the company's King Abdullah Economic City attracted investments worth 130 billion Saudi riyals (Dh130 billion) this year and sales of 1 billion riyals.