UAE’s Aldar swings to profit on govt land sales
Aldar Properties, bailed out twice by Abu Dhabi with rescue packages totalling over $10 billion, swung back into profit in 2011 on the back of land sales to the government and increased residential sales.
February 14, 2012 2:41 by Reuters
The builder of the Yas Marina Formula One circuit said in a statement on Monday that it would now focus on long-term growth and use funds selectively, following the building spree of recent years.
The indebted developer, the biggest in Abu Dhabi by market value, was hit by slumping property prices in the United Arab Emirates, forcing it to sell key projects to the government, including the Ferrari World theme park.
“We are entering 2012 in a stronger financial position, with lower debt levels and stable cash flows,” said Ali Eid AlMheiri, the chairman of Aldar Properties.
“We are a more efficient organisation that is well positioned to capitalise on market opportunities and drive shareholders’ returns by deploying capital selectively into key projects.”
Abu Dhabi fared better than neighbouring emirate Dubai which saw a collapse in its property market and the restructuring of its flagship firm Dubai World. However, the emirate is facing challenges now as a huge supply of high-end homes are expected to enter the market.
Property prices in Abu Dhabi are expected to fall another 11 percent this year, a Reuters poll showed.
Aldar made a profit of 642.5 million dirhams compared with a massive loss of 12.7 billion dirhams in the prior-year period.
Aldar’s fourth-quarter profit was 182.1 million dirhams, Reuters calculated, compared with a loss of 11.14 billion dirhams in the year-earlier period.
Income was boosted by 3.9 billion dirhams secured from the sale of Central Market and the Ferrari World theme park to Abu Dhabi, the developer said.
Aldar’s board has also proposed a dividend for the first time since the ailing company was rescued by Abu Dhabi with the first bailout of $5.2 billion in 2010.
Impairments, provisions and fair value writedowns of 3.03 billion dirhams were also recorded in the year.
Revenue for 2011 was 6.7 billion dirhams, compared with 1.8 billion the previous year. Aldar generated 5.4 billion from the sale of land plots and completed residential units and project management fees.
“The increase was primarily due to revenue from land sales to the government, supplemented by increased sales of residential units,” Aldar said in the statement.
Recurring revenue from investment properties, hotels and schools rose 48 percent, it said.
The developer said it ended 2011 with 4.2 billion dirhams in cash.
An analyst at Global Investment House polled by Reuters estimated a fourth-quarter profit of 89 million dirhams, while another from SICO Bahrain had expected a loss of 128 million dirhams.
Shares of Aldar ended flat on the Abu Dhabi bourse before the earnings were announced. ($1 = 3.6730 UAE dirhams) (Reporting by Praveen Menon; Editing by Will Waterman) *image from topnews.ae