Emaar Properties PJSC (EMAAR), the United Arab Emirates’ biggest developer by market value, said fourth- quarter profit more than doubled as it cut costs and generated more revenue from hotels and international operations.
Net income jumped to 716 million dirhams ($195 million) from 274 million dirhams a year earlier, the company said today in a statement. The average estimate of five analysts was for a profit of 460 million dirhams, according to data compiled by Bloomberg.
Emaar, builder of the world’s tallest building, is increasingly relying on retail and hospitality to cushion a slump in home and office sales in its home market after property prices slid by more than 65 percent. Operations in Turkey, Pakistan, Egypt, Syria and Saudi Arabia contributed 1.81 billion dirhams of revenue, or 22 percent, compared with 8 percent a year earlier.
Total revenue in the fourth-quarter dropped to 2.24 billion dirhams from 3.83 billion a year earlier while costs fell 63 percent to 970 million dirhams. Revenue rose 20 percent from the third quarter to the fourth, Emaar said.
“Retail revenues came in 5 percent below our estimates but the remaining segments delivered results beating our already bullish expectations,” said Jan Pawel Hasman an analyst at EFG- Hermes Holding SAE with a “buy” rating on the stock.
Hasman noted that Emaar’s gross margin widened to 57 percent, from 52 percent in the third quarter.
“Our strategy for 2012 is to further increase the share of revenues from global operations and enhance the proportion of profit from recurring revenue streams, including shopping malls & retail and hospitality & leisure,” Chairman Mohamed Alabbar said in the statement.
Bond Yield Falls
The yield on Emaar’s 7.5 percent $500 million convertible bond due 2015 fell 15 basis points, the most in almost two weeks, to 7.47 percent at 5 p.m. in Dubai.
Last year, Emaar completed 350 homes and more than 800,000 square feet of commercial space in Dubai and 604 homes in other markets. Emaar has handed over more than 33,500 residential units since 2001, the company said.
The developer also started Dawahi Development, a new unit to invest in middle-income housing across the Arab world.
In December, the company signed an Islamic and conventional financing facility valued at 3.6 billion dirhams, which was backed by Emaar’s flagship Dubai Mall, the world’s largest.
Emaar rose 1.4 percent in Dubai trading to close at 2.98 dirhams today. The shares dropped 8.3 percent in the past 12 months, giving the company a market value of 18.2 billion dirhams. The Dubai Financial Market General Index has fallen 38 percent in the past year.
To contact the reporter on this story: Zainab Fattah in Dubai on email@example.com.