Emaar share price declines despite first-half profit rise

Emaar

• First-half profit up 15%
• ‘Other income’ reached AED919m
• Share prices fell around 1%

Dubai’s Emaar Properties reported a 15 percent rise in first-half net profit on Thursday as declining costs and surging other income more than offset a double-digit drop in revenue.

Yet investors seemed unimpressed, and the company’s share price, and that of its subsidiary Emaar Development, were both down in early trading on Dubai’s bourse.

Emaar Properties made a net profit of AED4.95 billion ($1.35 billion) in the first six months of 2023, up from AED4.30 billion in the prior-year period.

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Half-year revenue fell 10 percent to AED12.27 billion, while revenue costs dropped 18 percent to AED5.50 billion and marketing and sales expenses eased 6 percent to AED1.29 billion.

Significantly, Emaar’s “other income” nearly doubled to AED919 million, the company said in a press statement.

As of 0822 GMT, Emaar had yet to publish its full financial statement for the period, which should provide further details on what this other income entails and how the company was able to cut costs substantially.

Emaar attributed its “consistent performance” to “growth in tourism, retail sales, and sustained real estate demand in Dubai”.

Emaar Development, majority owned by Emaar Properties, said its first-half net profit fell 1 percent year-on-year to AED2.18 billion as revenue declined by more than one-third to AED4.46 billion.

A steeper drop in revenue costs, reduced sales and marketing expenses, and a ten-fold increase in other income enabled the subsidiary to post near-flat profit despite the revenue slump.

Emaar Development’s property sales were AED19 billion in the first six months of 2023, up from AED15.2 billion a year earlier. It said this was due to its launch of 16 new projects.

As of June 30, its sales backlog was AED53.2 billion, which will be recognised as revenue in the coming years.

“The notable growth in our backlog indicates a healthy demand in our key markets and affirms the positive returns from our investments in major products,” Emaar’s founder, Mohamed Alabbar, said in a statement announcing the subsidiary’s results.

In the first half of 2023, Emaar Development delivered 5,100 residential units in various locations in Dubai such as Dubai Hills Estate, Dubai Creek Harbour, Downtown Dubai, Emaar Beachfront, Arabian Ranches, Dubai Marina and Emaar South. It has a further 28,000 homes under development in the UAE.

As of 0830 GMT, the share price of Emaar Properties and Emaar Development were down 1.6 and 0.6 percent respectively.

Residential property prices in Dubai enjoyed record sales in the first half of this year. Villas topped previous records set in 2014.

Property consultancy CBRE reported that 57,737 deals took place in the first six months of the year, the highest level on record.