Sorouh’s Q2 profit plunges 75.5%, shares down

Sorouh Real Estate posted a second-quarter net profit of Dh150.98 million ($41.08 million), down 75.5 per cent from the year-earlier period, driving shares lower.

Abu Dhabi's second-largest property developer by market value said it earned net profit of Dh281.42 million dirhams in the first half of the year, compared with Dh977.61 million a year earlier, the firm said in a statement on Wednesday.

The company’s shares tumbled as well in early trading on Wednesday. Sorouh was down 0.4 per cent, recovering most of its initial losses when its shares fell 3.8 per cent at trading day opening.

"As usual, people over-reacted, but other investors will be tempted in at lower prices and so it should bounce back," says Ayman el-Saheb, Darahem Financial Brokerage director of operations.

Sorouh reported a net profit of Dh687.04 million in the second quarter of 2008.

Revenues for the half of 2009 fell to Dh1.3 billion, compared to Dh1.69 billion in 2008. Second quarter revenues were down to Dh978 million from Dh1.1 billion in the same period last year.

The company said results were in line with its expectations and reflected its strategy to focus on "cash conservation" and "management of operating costs".

The company said its Abu Dhabi developments remained on schedule and expected to see a "gradual quarter-on-quarter improvement" on the back of unit sales and rental income from a number of its projects.

Developers across the United Arab Emirates have suffered the impact of the global financial crisis which put an end to a six-year construction boom.

The downturn resulted in the cancellation of hundreds of billions of dollars worth of projects in the recent months while valuations and sales fell.

Sorouh's first quarter results fell by more than half compared to last year.

Meanwhile, Aabar Investments jumped 5.5 per cent after the company said it would launch a joint venture with Austria's Berndorf to invest in technology companies and European real estate firms.

"Any positive news like this is usually taken very well, especially when it comes to investment companies," says Saheb.

Abu Dhabi's index rose 0.1 per cent to 2,699 points.

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