Emaar Profit Drops as Rising Costs Overshadow Revenue Increase

April 30 (Bloomberg) -- Emaar Properties PJSC, Dubai’s biggest developer by market value, said first-quarter earnings dropped 8 percent, in line with analyst estimates as rising costs wiped out a 16 percent increase in revenue.

Net income fell to 556 million dirhams ($151 million), or 9 fils a share, from 606 million dirhams, or 10 fils, a year earlier, the Dubai-based company said in a statement today. Analysts forecast earnings of 557 million dirhams, the median of five estimates in a Bloomberg survey.

Emaar, builder of the world’s tallest tower in Dubai, is returning to large projects after the global financial crisis caused property prices to slump by 65 percent. The developer, which generates half of its income from hotels and shopping malls, is selling serviced hotel apartments and expanding the Dubai Mall, the world’s biggest by area.

The company is planning landmark developments in Dubai and is expecting revenue from such projects to overtake income from hotels, malls and office rentals, Chairman Mohammed Alabbar said at the company’s general annual meeting on April 9.

First-quarter sales climbed to 2.11 billion dirhams from 1.82 billion dirhams, the company said. Recurring revenue, including rents from assets like hotels and malls, increased 11 percent and accounted for 55 percent of the total, the company said.

The earnings were published after the close of trading in Dubai. Emaar has risen 50 percent this year, compared with a 32 percent increase for the Dubai Financial Market General Index.

To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.