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Egyptian Resorts H1 net drops, no land sales
Company says land sales in the pipeline.
August 16, 2010 8:57 by Reuters
Real estate firm Egyptian Resorts’ net profit slumped more than 90 percent in the first six months of 2010, the bourse said on Sunday, after the company failed to sell any land.
But analysts said the company’s earnings could recover as soon as next year thanks to new management and a partnership to develop land with property developer Orascom Development Holding (ODH).
“They make money from selling land — for the last eight quarters they haven’t sold any,” Naeem Holding analyst Hisham Halaldeen said. “We expect the company to go through a sales famine until the end of 2010.”
A company executive said the lack of land sales was a reflection of the world economy and many property developers had been postponing decisions on deals. But he was confident the situation would improve.
“We feel very confident that we are going to make sales in the coming months,” Egyptian Resorts investor relations manager Abu Bakr Makhlouf said.
“There are several sales deals in the pipeline. When exactly they will materialise, we are not sure, but this pipeline gives us confidence that at some point we will have substantial sales,” he added.
The firm posted a profit of 622,606 Egyptian pounds ($109,200) for the first half of the year, down from 11.1 million pounds a year earlier.
In April, Orascom Development said it bought a 4.5 percent stake in Egyptian Resorts and would develop 2.5 million square metres (618 acres) of its Sahl Hasheesh resort.
“The launch of the Marina project in partnership with ODH will be the game changer starting in the first quarter of 2011,” Halaldeen said.
Mohamed Kamel, the company’s new chief executive, told Reuters in April the company had enough cash and receivables to weather three to four years without selling land.
Shares in Egyptian Resorts closed down 1.5 percent before the results were issued, while the main index shed 0.5 percent.
(By Dina Zayed, Editing by Erica Billingham)