Dubai's Emaar Quarterly Profit Misses Estimates as Costs Surgeby
Emaar's profit misses analysts' estimates of 1 billion dirhams
Developer's cost of sales outpaces 56 percent sales increase
Emaar Properties PJSC, the builder of the world’s tallest tower in Dubai, reported an increase in third-quarter profit that missed analysts’ estimates after costs escalated and demand for real estate in its home market began to slow.
Net income rose 31 percent to 843 million dirhams ($230 million), or 12 fils a share, from 645 million dirhams, or 9 fils, a year earlier, the Dubai-based company said in a statement Sunday. The mean estimate of five analysts was for a profit of 1 billion dirhams, according to data compiled by Bloomberg.
Emaar, Dubai’s biggest developer by market value, still derives the majority of its property sales from its home market even after expanding in the Middle East region and India. Dubai’s property sales have slowed in recent months, with values falling at the fastest pace in the world earlier this year. A surge in revenue for Emaar was off set by a 61 percent increase in cost of sales, which the company didn’t explain in its statement.
Revenue reached 3.3 billion dirhams in the third quarter compared with 2.14 billion dirhams in the year earlier period, Emaar said. The mean estimate of four analysts by Bloomberg was for 3.2 billion dirhams. The cost of sales surged to 1.67 billion dirhams from 1.04 billion in the year earlier period, according to the company.
Emaar, which is building a large projects in Dubai such as Dubai Creek Harbour and Dubai Hills, said its assets are valued at over 156 billion dirhams and its land bank reached 195 million square meters in Dubai and across international markets.
The earnings were published after the close of trading in Dubai. Shares of Emaar have slid 15 percent this year, compared with a 10 percent decline for the Dubai Financial Market General Index.