July 29 (Bloomberg) -- Emaar Properties PJSC, the developer of the world’s tallest tower in Dubai, said second-quarter profit more than doubled, beating analysts’ estimates, as a one-time impairment charge was not repeated and it cut costs.
Net income climbed to 614 million dirhams ($167 million) from 250 million dirhams a year earlier, the company said in a statement to the Dubai stock market today. The mean estimate of five analysts was for a profit of 545 million dirhams, according to data compiled by Bloomberg.
Emaar, also the owner of the world’s largest shopping mall in Dubai, is increasingly relying on income from hotels and retail as revenue from residential sales declines. Dubai’s biggest publicly traded developer plans to add 1 million square feet (92,903 square meters) of space to the Dubai Mall, to boost recurring income.
The results “are likely to provide support to Emaar’s share performance,” said Jan Pawel Hasman, a Cairo-based analyst at EFG-Hermes Holding SAE with a buy rating on the stock. “We continue to view Emaar as one of the soundest and attractively priced exposure to the Middle East, North Africa real-estate market, supported by a solid stream of hospitality and retail revenues.”
The shares closed 0.3 percent lower at 3.24 dirhams before the results were announced. The stock has increased 26 percent this year compared with a 12 percent gain for the benchmark Dubai Financial Market General Index.
Like most of its peers in the United Arab Emirates, Emaar saw earnings drop after Dubai’s property market collapsed at the end of 2008 and caused residential values to fall by 60 percent or more. Income from selling properties in the 818-meter (2,684-foot) Burj Khalifa, the world’ tallest tower, has dwindled as buyers paid their final installments on completed apartments.
In the second quarter last year, Emaar wrote off its 172 million-dirham investment in Dubai Bank PJSC, which was taken over by the government and merged with Emirates NBD PJSC after losses mounted. The developer cut costs by 9 percent to 965 million dirhams in the second quarter of this year, while revenue gained 3 percent to 2.1 billion dirhams.
Rental, retail and hospitality businesses contributed 51 percent to first-half revenue, the company owned 31 percent-owned by the government said today. Rental and retail income grew 23 percent to 1.3 billion dirhams, while hospitality business raked in 720 million dirhams in the first half.
“The real estate market in Dubai is turning around,” Chairman Mohammed Alabbar said in the statement. “Emaar’s financial results for the first half of the year reflects the growing strength of Dubai’s economy.”
Emaar this month raised $500 million from the sale of seven-year Islamic bonds at a profit rate of 6.4 percent. Last year, the company raised $500 million from a sukuk sale at a profit rate of 8.5 percent and a 3.6 billion-dirham financing facility backed by its Dubai Mall.
“To add long-term value to our stakeholders, we are planning on bigger growth in our home market through projects such as the Dubai Modern Art Museum & Opera House District, and the expansion of The Dubai Mall, in addition to new project launches,” Alabbar said.
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