Emaar delivers 1,778 units and an almost unchanged profit of $577m for 2012 so forget a higher dividend?Posted on 31 January 2013 with 1 comment from readers
The largest company quoted on the Dubai Financial Market, Emaar Properties today posted a $577 million net profit for 2012 after the exchange closed, a modest advance on $560 million the previous year. The property developer delivered 1,105 homes locally and 673 internationally in the 12 months and 271,000 sq ft of commercial space.
Avaricious Emaar shareholders will now doubtless be touting for a higher dividend. Annual general meetings are usually fractious events with an ambush for chairman Mohamed Alabbar over the dividend. However, with profits virtually unchanged on a year earlier the case for a higher dividend is not very strong this year.
Mr. Alabbar commented: ‘Last year was one of transformation, for Emaar Properties, Dubai and a number of the international markets that we serve. With Dubai restating its credentials as a global business and tourism hub, Emaar capitalised on the city’s resurgence by investing in creating prime real estate assets and strengthening our shopping malls and hospitality businesses.
‘Our inspiration has been and continues to be the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, which emphasises the continued expansion of the core sectors of tourism, retail and hospitality.’
Emaar’s shopping malls, retail and hospitality and leisure businesses contributed $1.1 billion to full-year revenue, representing 50 per cent of the total. The contribution of Emaar’s international operations to total revenue was $344 million or 15 per cent, representing the handover of homes and offices in Turkey, Lebanon, Saudi Arabia, Egypt and Pakistan.
The shopping malls and retail business alone contributed $740 million, 27 per cent up on 2011 with the Dubai Mall, Emaar’s flagship development, welcoming 11 per cent more visitors at over 60 million. Hotel and leisure business revenues stood at $375 million, 13 per cent up. The Address Hotels recorded an average annual occupancy of 85 per cent in 2012 and won new management contracts to operate luxury resorts in Egypt and Kenya.
With total assets of over $16.7 billion as at 30 September 2012, Emaar has a land bank of more than 234 million square metres in international markets, and over 11 million square metres in current gross construction area in the UAE.
Nevertheless, the company is clearly proving much more successful at exploiting its land bank at home than overseas where it has made huge investments that are not currently showing much return. Investments in countries afflicted by the Arab Spring in particular may be very slow to show future profits and could be subject to write-downs.
That said in the context of emerging markets being the largest foreign landowner in India surely ought to pay-off in the long-term. But in the short-term the recent hike in the Emaar share price looks overdone as the group has barely increased its net profit over the past year during a period of considerable recovery in its home city of Dubai, and is too dependent on rental income.