Emaar delivers mixed profit results

REAL ESTATE giant Emaar Properties reported a net profit of US$328 million for the second quarter of this year, down some 8.8% from the company’s first-quarter results of US$360 million.

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By  Massoud A. Derhally Published  July 24, 2005

REAL ESTATE giant Emaar Properties reported a net profit of US$328 million for the second quarter of this year, down some 8.8% from the company’s first-quarter results of US$360 million. However, the company’s net profit rose from US$142 million in first half of last year to US$689, in the first six months of this year, an increase of 384%. Revenues for the first half rose 94% to US$1.27 billion, up from US$661 million in the same period last year. Earnings per share reached US$0.5, compared with US$0.1 in the first-half of 2004. “The second quarter came in lower than the first quarter but these results were more or less expected,” Walid Shihabi, head of research at Dubai-based investment bank Shuaa Capital, told Arabian Business. The company, which accounts for 70% of the Dubai Financial Market, also said it won support from its shareholders for a 1:1 rights issue that will increase the number of shares from 2835.5 million to 5671 million. The rights issue premium price for each share of US$0.27 per share has been fixed at US$1.08 to be paid in four instalments. The funds raised will underpin Emaar’s international business expansion and its operations in Dubai. The company also announced a 15% bonus share issue on the existing number of shares as part of the total package to the rights issue. Shareholders also approved raising the limit of foreign ownership in the company’s equity to 49%. The Dubai Financial Market rose by 6% after Emaar announced July 21 as the cut-off day to qualify for shares in its 1:1 rights issue. Shihabi said the company would continue to perform well in the future because of its strong leverage at home. “This sort of level of profitability and these sorts of margins are to be expected over the next couple of years because that is where we have a visibility for the existing projects. From that point onwards it becomes harder to call because the contribution of the international operations of the company will be substantially higher and the profits generated from their international operations would not be as strong as those provided in Dubai, because their favourable position in Dubai cannot be replicated elsewhere,” explained Shihabi. Shuaa estimates that if Emaar can successfully implement the existing model it has in Dubai, outside the region, it would then have a strong impetus for growth and good results. Timely delivery of key phases of Emaar’s residential developments and sustained demand in the domestic real estate market have buoyed the company’s financial performance. Up to June 30, 2005, Emaar delivered more than 10,000 homes to owners and launched more than 50 real estate projects. During the last quarter, Emaar launched La Colecc’ion II and Alvorada at Arabian Ranches, Park Island at Dubai Marina, Parklands and Fairways at Emirates Living. Recently, Emaar also launched the Al Hambra and Montgomerie Maisonettes, which overlook the Montgomerie Golf Course. In May 2005, Emaar also signed an agreement with Giorgio Armani SpA for the US$1 billion development of a collection of Armani Hotels and Resorts.

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