UAE firms’ Q1 net marginally up

Profits of the UAE listed companies were almost unchanged in first quarter 2011 compared to same period last year due to Mena political crisis.

The combined aggregate profit of UAE listed firms in Q1 stood at Dh10.18bn compared to Dh10.15bn recorded in the corresponding period of previous year, representing a 0.25 per cent increase. All listed non-UAE companies have been excluded, Kuwait-based Global Investment House said in a study.

The Emirates Securities and Commodities Authority (SCA) announced that the disclosure rate of local public UAE companies for Q1 has reached 98.1 per cent. Dubai Financial Market showed 100 per cent compliance.

Higher oil prices and the tsunami of political unrest that swept across the Middle East, causing the stepping down of both the Tunisian and Egyptian presidents had its ripple effect of some major companies.

Many UAE companies had direct exposure to Egypt either in terms of financial investments, which were hit by panic selling and shutting down the stock market for more than 39 sessions or scheduled projects that were delayed due to political and economic instability.

Sector wise, six out of the ten sectors reported declines with the Investment sector showing the biggest drop, with an aggregate profits plunging to Dh55.5 million, a retreat of 81.6 per cent from Dh301.5m reported Q1. On the other side, the Consumer Services sector was the highest gainer, with 32.34 per cent growth standing at Dh104.3m in Q1 2011 from Dh78.82m recorded in Q1 2010.

The banking sector was the major contributor in UAE aggregate profitability constituting almost 53 per cent. The sector registered a 9.18 per cent growth in aggregate profits for Q1 totalling Dh5.8 billion compared to Dh5.31bn in Q1 2010.

Sector’s provisioning requirements were eased off considerably in Q1 2011 compared to FY2010. UAE banks experienced significant divergence in its performance during Q1 2011. Thirteen banks were able to report a better performance, while six banks witnessed a decline in profitability. One reduced its interim losses compared to corresponding quarter and two abandoned profits registered in Q1 2010 ending Q1 2011 with noticeable losses.

Dubai banks saw a higher YoY rise of 11.54 per cent mainly due to Tamweel, which had the highest growth of 430.85 per cent during Q1 2011.

The telecommunications sector, excluding non-UAE companies, realised a 3.26 per cent drop in net profit for Q1 2011, with total profits amounting to Dh2.02bn compared to Dh2.09bn in Q1 2010. This retreat was due to etisalat, which reported 8.88 per cent lower profits in Q1 2011 stood at Dh1.8bn due to competitive pressures in its home market UAE, which slowed down company’s operations in UAE, although the company’s international operations are expanding.

On the other side, Emirates Integrated Telecommunication Co. (du), Q1 results more than doubled reaching Dh205.8m, up by 112.1 per cent on account of significant rates of growth in mobile data usage. Mobile data income more than doubled to Dh141m in 1Q201, representing an increase in company’s mobile revenues.

The real estate sector had a total Q1 profit of Dh890.72m, 19.51 per cent higher YoY. Abu Dhabi real estate sector showed strong signs of recovery shifting to profitability in Q1 with total profits amounted to Dh288.92m compared to Dh141.82m, net loss recorded in Q1.

This improvement was mainly driven by Al Dar Properties, which turned back to profits reaching  Dh189m, after the securing a $5.2bn government bailout in January 2011.

Dubai Real estate sector was noticeably hit in Q1. Emaar Properties, the largest company in the sector, reported a 44.6 per cent drop in profits for Q1 2011 to come to Dh421m. Emaar deliveries slowed down in Q1 2011, which represented 79.70 per cent drop in its sales during the quarter.

Arabtec Holding Company witnessed massive drop of 80.22 per cent in profits amounting to Dh26.61m, which negatively affected emirate’s real estate combined profitability. This deterioration was mainly due to significant slowdown on other order, which impacted Q1 2011 revenues. Also, both lower margins and higher minority interest dragged net profit after minority interest to be much less than expectations.

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