Emaar plans overseas push after profit boost
12 February 2010
Emaar Properties, builder of the world's tallest tower, said it would focus on mid-income housing in emerging markets and overseas expansion to boost this year's revenue after returning to profit in the fourth quarter.
Property firms in Dubai were hit hard by the global downturn, which sent prices in the emirate's once-booming real estate sector tumbling some 50 per cent from their peaks in 2008.
Emaar, the Arab world's largest listed developer said net profit in the three months to December 31 was 720 million UAE dirhams ($196.1m), below the consensus of 761m dirhams in a Reuters poll and compared to a loss of 2.4 billion dirhams the previous year.
"Fourth quarter results are in line with our expectations, fears of any negative surprise have been alleviated," said Roy Cherry, Shuaa Capital vice-president for research.
"Last year was a tough one, but Emaar cleaned up its book, boosted its recurring cash flows and set the grounds for a better 2010."
Emaar said on January 4 at the opening of its Burj Khalifa, the world's tallest tower, it would focus on its international projects and that Dubai's property prices had stabilised.
"This year, Emaar will also focus on middle income housing as a strategic growth area to meet the growing demand for homes in emerging markets," the company said in a statement, citing India, Egypt and Pakistan as potential growth areas.
Emaar delivered only about 3,100 units last year, below the 4,900 delivered in 2008, while revenue at its malls and leisure businesses increase significantly.
"The company proves with the delivery of 3,100 units, there is still demand for high quality units and developments," said Nomura analyst Chet Riley.
"But we think the value of businesses is recurring rental and investment portfolio and that's starting to pay dividends," he said, adding the company was grooming these units for potential initial public offerings.
Full year profit rose 98pc year-on-year to 327m dirhams on revenue up 94pc to 2.99bn dirhams.
Emaar, 31.2pc owned by the Dubai government, is less indebted than other Dubai property firms, with about 8.1bn dirhams in loans and borrowings outstanding as of September last year. Half of that figure is due this year.
It cancelled a merger with the property units of indebted state-linked firm Dubai Holding in December.
The developer said net operating profit decreased due to 234m dirhams worth of provisions partly made by affiliates, including mortgage lender Amlak and Dubai Bank, towards their loans and advances portfolio.
Source: Gulf Daily News