Aug. 4 (Bloomberg) -- Emaar Properties PJSC, Dubai’s biggest developer by market value, reported second-quarter profit that missed estimates as year-on-year revenue fell for the first time in seven quarters.
Net income rose 29 percent to 868 million dirhams ($236 million), or 13 fils a share, from 675 million dirhams, or 11 fils, a year earlier, the Dubai-based company said in a statement today. Analysts predicted earnings of 932 million dirhams, the average of five estimates compiled by Bloomberg.
Emaar is focusing on businesses that generate recurring revenue, such as hotels and malls, as it tries to cushion itself from any future shocks in the emirate’s property market. The developer, which plans to spin off its malls unit into a separate company, didn’t give a time line for the initial public offering after missing an original deadline in June.
“Although Emaar’s bottom line missed, that won’t change my long-term view, which is positive,” Harshjit Oza, an analyst at NAEEM Brokerage, said by phone today. “The company has two positive catalysts ahead of it: the malls unit IPO and the restructuring of Amlak.”
Amlak Finance PJSC, the Dubai-based Islamic mortgage provider in which Emaar has a 45 percent stake, on July 1 proposed a new deal to restructure about $2.7 billion in debt. Amlak’s shares were suspended in November 2008 after the global credit crisis blocked its access to borrowing and the property market collapsed.
Emaar’s second-quarter revenue fell 9.7 percent to 2.8 billion dirhams from a year earlier, the first drop since the third quarter of 2012. Analysts had expected 2.96 billion dirhams.
Recurring revenue from retail and hospitality rose 12 percent to 1.3 billion dirhams in the quarter. The units generated 52 percent of sales in the first half, Emaar said. Property sales in international markets are up more than 60 percent in the second quarter to 463 million dirhams, according to Taher Safieddine, an analyst at Shuaa Capital PSC.
Emaar doesn’t provide analysts or investors with guidance on the number of properties it expects to hand over to buyers each quarter to help predict revenue. The developer adopts an accounting method that recognizes property sales once the buyer is handed keys of the completed property, even though payments are made while construction is progressing.
The earnings were published after the close of trading in Dubai. Emaar rose 3 percent to close at 10.15 dirhams today. That brought the stock’s gain this year to 46 percent, compared with a 45 percent increase for the Dubai Financial Market General Index.
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