(MENAFN- Gulf Times) Abu Dhabi's Aldar Properties reported a 36% rise in first-quarter net profit yesterday as costs fell and earnings from its rental business surged.
Aldar, like other developers in the UAE such as Dubai's Emaar Properties, has diversified its income away from property sales and into recurring revenue businesses - such as residential, office and retail rentals, plus HOTELS AND hospitality.
This has helped mitigate volatility in the country's real estate sector - which has gone from boom to bust to boom again - and Aldar has now reported rising profits in seven out of the last eight quarters.
It made a net profit of 618mn dirhams ($168.3mn) in the three months to March 31, it said in a bourse statement. That compared with a profit of 453.4mn dirhams in the corresponding period of 2014.
Analyst SICO Bahrain had forecast Aldar - builder of Abu Dhabi's Formula One circuit - would make a quarterly profit of 509.2mn dirhams.
Aldar's first-quarter revenue fell 19.5% to 1.38bn dirhams, year-on-year, but its quarterly gross profit margin rose to 47%, from 20%.
The higher margin was due to "a significant improvement in the quality of our earnings", chief financial officer Greg Fewer said. "This is set to continue," he added.
Quarterly gross profit from recurring revenue jumped 61% to 368mn dirhams.
Aldar's first-quarter revenue included 579mn dirhams from property development and sales, 453mn dirhams from INVESTMENT properties - residential, office and retail rentals - and 157mn dirhams from its hotel business.
Direct costs dropped to 737.5mn dirhams, from 1.37bn dirhams in the prior-year period.
The company's borrowing costs fell to an average of 2.75%, from 5% a year earlier, Fewer said, after it paid off some debt and ratings agencies upgraded the company.
This enabled finance charges to fall 59% quarter-on-quarter, Fewer said.
The company booked property sales and reservations of 1.2bn dirhams in the first quarter.
Aldar reduced its gross debt to 8.2bn dirhams, from 9.2bn dirhams at the end of 2014. This helped cut its net debt-to-equity ratio to 16% from 25% at the end of last year.
State-owned fund Mubadala Development Co owns 30% of Aldar, Thomson Reuters data shows.
Amlak FINANCE
Dubai-based Islamic mortgage lender Amlak Finance recorded a 77% plunge in first-quarter profit because of amortisation charges, the company reported yesterday.
Amlak, which has said previously that it aims to resume TRADING of its shares on the Dubai bourse this month after years of restructuring, reported that net profit fell to 3.7mn dirhams ($1.01mn) from 16mn dirhams in the same period last year.
The company "recorded an amortisation or unwinding of an initial fair value gain recognised on investment deposits at the time of restructuring" for an amount of 28mn dirhams in the first quarter, it said.
The total fair value gain was 911mn dirhams and this will now be amortised over 12 years, according to Amlak's financial statement. The company took a charge of 25mn dirhams for this purpose in the fourth quarter of last year.
Its shares have been suspended since November 2008, when the global financial crisis triggered a local real estate crash. Shareholders on April 16 voted to resume trading of the shares on the Dubai Financial Market and a request was sent to the STOCK MARKET regulator.
Drake & Scull
Dubai's Drake & Scull (DSI) reported a 38% drop in first-quarter profit yesterday, missing an analyst's estimate as revenue fell, and it warned that difficulties in Saudi Arabia would affect its performance this year.
The contractor made a net profit attributable to shareholders of 25.1mn dirhams ($6.83mn) in the three months to March 31, down from 40.3mn dirhams in the year-earlier period, according to a statement to Dubai's bourse.
Global Investment House had forecast DSI would make a first-quarter profit of 38mn dirhams.
DSI's first-quarter revenue was 1.11bn dirhams, down from 1.25bn dirhams a year earlier.
"Despite the volatile market conditions and the liquidity crunch in our industry, we managed to remain profitable," the company said in the statement.
"We are still dealing with some major operational setbacks in Saudi Arabia which will continue to have a far-reaching effect on our performance in 2015." It did not elaborate.
Taqa
Abu Dhabi National Energy Co, the state-owned OIL explorer and power supplier, has said first-quarter net profit dropped 6.6% from a year earlier to 256mn dirhams ($69.8mn) because of low OIL PRICES.
Total revenues tumbled 29% to 5.13bn dirhams because of the plunge of oil prices since last June.
The company received a 553mn dirham tax credit during the quarter from a one-off tax rate change for its operations in Britain's North Sea, which prevented it from posting a loss for the quarter.
Its global oil and gas production stayed steady at 157.9mn barrels of oil equivalent per day, flat from a year earlier, despite a cut in capital spending, Taqa said. Production in Britain and the Netherlands rose, offset by a slight decrease in North American output.
Revenues from selling electricity and water fell 6.6% during the quarter to 2.10bn dirhams.
Because of cheap oil, Taqa aims to reduce its 2015 capital spending by 40% to 3.8bn dirhams.
Arabtec
Dubai's largest construction firm Arabtec has swung to a first-quarter net loss, missing analysts' estimates, as costs surged.
The builder reported a loss attributable to equity holders in the parent of 279.82mn dirhams ($76.2mn) in the three months to March 31, compared to a 137.89mn dirham profit in the corresponding period of 2014, it said in a statement to Dubai's bourse on Wednesday.
The earnings were well below estimates from two analysts polled by Reuters. Global Investment House had forecast Arabtec would make a quarterly profit of 95mn dirhams, while Sico Bahrain had estimated a profit of 20.2mn dirhams.
The company has seen major management upheavals over the past year, culminating in the election last week of Abu Dhabi businessman Mohamed Thani Murshed Ghannam al-Rumaithi as its chairman. He replaced Khadem Abdulla al-Qubaisi, who was not nominated for renewed board membership.
The departure of Qubaisi followed the resignation of Hasan Ismaik as chief executive last June after frictions between Ismaik and Arabtec's major shareholder, Aabar Investments.
Arabtec's direct costs reached 1.93bn dirhams during the first quarter, up 28% from the corresponding period of last year, the statement showed. Revenues rose only marginally, by 0.2% to 1.79bn dirhams.
The company has been negotiating a $36.7bn scheme to build 1mn housing units in Egypt, but has not yet announced the signing of a final contract. It has major projects in Saudi Arabia and the UAE.
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