Emaar’s first quarter profit falls on sub-prime woes



Emaar Properties, the largest Arab real estate company by market value, posted its second decline in profit in three quarters as revenue stagnated, and marketing and selling costs rose. It missed forecasts.


Net income in the three months to March 31 fell 3.8 per cent to Dh1.66 billion ($451 million), or annualised earnings per share of Dh1.08, compared with Dh1.72 billion in the year-earlier period, Emaar said in a statement.


Revenue at its US John Laing Homes unit fell Dh1.2 billion compared with the fourth quarter, Emaar said, without providing a year-earlier comparison.


Total revenue declined slightly to Dh3.96 billion, compared with Dh3.97 billion a year earlier, while marketing and associated costs rose almost 33 per cent to Dh626 million, it said.


Emaar Chairman Mohamed Alabbar said in the statement that the company was operating in an "extremely challenging global economic environment".


Analysts' forecasts for Emaar's profit, in a Reuters survey last month, ranged from Dh1.7 billion to Dh1.98 billion.


Profit last fell in the third quarter, its first decline in in at least three years as the company spent more on foreign operations in countries such as Egypt.


Still, Emaar generates most of its income from its home market, Dubai, where the economy is surging on a five-fold increase in oil prices during the last six years that has spurred investment in the Gulf.


Emaar's UAE first-quarter sales rose to a record Dh5.6 billion, it said without giving a year-earlier comparison. Dubai is the second-largest member of the UAE federation. Two-bedroom apartments at Burj Dubai tower, the world's tallest building and part of a $20 billion (Dh74 billion) residential and commercial project Emaar is building close to the city centre, start at Dh12.64 million each, according to its website.





In the fourth quarter, the company beat the average of analysts' forecasts with a 1.3 per cent increase in profit on falling construction costs as the Burj Dubai project nears completion.  The tower alone will cost about $900 million (Dh3.3 billion) and is due to open this year, though Alabbar said last month that construction was four months behind schedule.


The shares have fallen more than 24 per cent this year, compared with a fall of about 7 per cent for Dubai's main stock index. (Reuters)