Dar Al Arkan Real Estate Development Co. reported a 50 percent decline in fourth-quarter profit, missing analysts’ estimates, as lower margins on sales hurt the biggest publicly traded Saudi property company by assets.
Net income dropped to 144 million riyals ($38 million) from 290 million riyals, the Riyadh-based company said in a statement to the Saudi stock market today. The mean estimate of five analysts was for a profit of 252 million riyals, according to data compiled by Bloomberg.
Profit fell mainly due to “lower gross margins on property sales which are attributable to the geographical location of the properties, higher operating expenses and finance costs,” according to the company statement. Revenue grew 8 percent to 876.9 million riyals.
Dar Al Arkan has posted decline in profit for the past three years as properties companies compete to benefit from increased government spending on housing and infrastructure projects. The kingdom is opening up its property market and introduced a new mortgage law last year.
The shares climbed 14 percent in 2012 compared with a 6 percent increase for the benchmark Tadawul All Share Index. Nine analysts say to buy the stock, while seven recommend holding it, according to data compiled by Bloomberg.