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29 March 2024

Emaar’s H1 profit grows 12% to Dh2.47bn on higher sales

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By Staff

Global developer Emaar Properties recorded a robust increase of 12 per cent in net profit to Dh2.475 billion ($674 million) in the first six months of 2016, compared to the net profit of Dh2.205 billion ($600 million) during the same period last year.

The half-year 2016 revenue is Dh7.257 billion ($1.976 billion), 11 per cent higher than the H1 2015 revenue of Dh6.520 billion ($1.775 billion).

Underlining the strength of its diversified business model, Emaar’s recurring revenues from its malls & retail and hospitality & leisure segments recorded an impressive Dh2.916 billion ($794 million), which is 40 per cent of the total H1 2016 revenue, and in line with the cumulative revenue from these businesses during H1 2015 at Dh2.9 billion ($790 million) despite the ongoing development of The Address Downtown Dubai.

Cementing the success of its international expansion, revenues from Emaar’s global operations were Dh1.032 billion ($281 million) during H1 2016. The global operations now account for 14 per cent of the total revenue.

Emaar recorded total sales at Dh10.44 billion ($2.842 billion) during the first half of 2016 and now has a formidable backlog of Dh45.90 billion ($12.50 billion), to be recognised over the next 3 to 4 years, highlighting its fundamentals for long-term profitability.

Strong fundamentals

Mohamed Alabbar, Chairman of Emaar Properties, said that the strong half-year results highlight the success of Emaar’s growth strategy to consolidate its position as the largest developer of iconic projects in Dubai with a sizeable sales backlog, and to build its recurring revenues.

“We are in one of the most exciting phases of our growth story having launched a brand-new icon for the city – The Tower at Dubai Creek Harbour - and the imminent roll-out of Dubai Opera in Downtown Dubai. We are scaling up our malls business with the launch of a Retail District in Dubai Creek Harbour and the expansion of The Dubai Mall. We are also strengthening our hospitality portfolio with 35 new hotels and serviced residences in the UAE and international markets.”

He added: “We will continue to explore opportunities to develop new land banks in Dubai through integrated developments that support the Dubai Plan 2021 and the preparations for Expo 2020.”

Positive Q2 2016

In the second-quarter (April to June) of 2016, Emaar sustained its growth trend with net profit at Dh1.270 billion ($346 million), an increase of 8 per cent over the profit during same period in 2015 of Dh1.179 billion ($321 million).

Revenue for Q2 2016 stands at Dh3.728 billion ($1.015 billion), which is higher by 7 per cent compared to the Q2 2015 revenue of Dh3.496 billion ($952 million). This was result of Emaar’s focus on on-schedule construction progress and the achievement of new milestones that contributed to higher revenue recognition.

During Q2 2016, revenue from shopping malls & retail and hospitality & leisure businesses were Dh1.361 billion ($371 million). International revenues in Q2 2016 were also healthy at Dh533 million ($145 million), up by 7 per cent compared to the Q1 2016 revenue from global operations at Dh499 million ($136 million).

First Choice For Homes

Emaar’s property business recorded positive growth during H1 2016 with revenue of Dh4.341 billion ($1.182 billion), which is 20 per cent higher than the property business revenue during H1 2015 at Dh3.620 billion ($986 million).

The total property sales for H1 2016 is at Dh10.44 billion ($2.842 billion), an increase of 23 per cent over H1 2015 of which Dh8.854 billion ($2.411 billion) of sales is in Dubai, 45 per cent higher than the property sales in Dubai during the first six months of 2015.

The Dubai sales were led by the launch of The Address Residences Dubai Opera and Il Primo in Downtown Dubai, premium Fairway Vistas & Sidra villas in Dubai Hills Estate, 52/42 prime waterfront development in Dubai Marina and Harbour Views at Dubai Creek Harbour. Demand for homes in Dubai Creek Harbour spiked with the launch of The Tower.

Growing recurring revenues

Emaar Malls, the shopping malls and retail business majority-owned by Emaar Properties, reported H1 2016 net profit of Dh987 million ($269 million), 17 per cent higher than the net profit of Dh845 million ($230 million) during the same period last year.

Revenue for H1 2016 from the malls business is Dh1.618 billion ($441 million), 11 per cent higher than the H1 2015 revenue of Dh1.452 billion ($395 million).

The hospitality & leisure, commercial leasing and entertainment businesses recorded H1 2016 revenue of Dh1.298 billion ($353 million).

Occupancy levels at The Address Hotels + Resorts were 86 per cent, higher than the industry average. The Address Boulevard Dubai, a brand new addition to the portfolio will open soon. Emaar launched the first mid-market brand hotel – the Rove Downtown Dubai – this year with nine more Rove hotels scheduled to open in central locations by 2020.

Value for stakeholders

Emaar has been upgraded to Baa3 long-term issuer rating by Moody’s Investor Service with ‘stable’ outlook highlighting its financial strength and ability to create sustained shareholder value through its ongoing projects and assured recurring revenues from its malls and hospitality businesses.

Demonstrating strong value creation, Emaar and Emaar Malls together distributed over Dh2.375 billion ($647 million) in dividends this year. Emaar has handed over more than 40,600 homes already, and has over 14,000 residential units in development in the UAE. With total assets valued at over Dh165.7 billion ($45.1 billion), Emaar has a land bank of 196 million sq m in UAE and international markets that will support its long-term growth.