Saturday, August 01, 2009

Emaar reports second quarter loss due to exceptional write-down

Emaar has reported Dh.1.29bn loss during the second quarter of the year, marking 161 percent decline in profits, compared to Dh.2.12bn during the same period last year, due to writing off the full value of its US subsidiary.

Emaar also recorded 135 percent decline in half-yearly profits, which dropped from Dh.3.01billion during the first half of 2008 to Dh.1.05billion during the first six months of 2009.

Emaar in its statement revealed that due to continued slow down in the US real estate market and Chapter 7 proceedings, pertaining to J L Homes, Emaar has decided to write down the complete book value of J L Homes, which amounts to Dh.1.73bn ($470million) during the second quarter, in order to be conservative in accounting for such an investment. This exceptional write-down resulted in a net loss of Dh.1.29bn during the second quarter of this year.

Emaar, the developer of the world's tallest tower, Burj Dubai, decided to write-down its investment in the US unit, J L Homes by Dh.1.77bn, back in 2008, as it tried mitigating further slumping. This resulted in a 54 percent decline in the company's year-end profits.

However, it is yet to be ascertained as to why this write-down has been leaving such a huge dent in the company's revenue. The second quarter results were released by Emaar, following closure of stock markets yesterday.

The Managing Director of CB Richard Ellis -Middle East, Nicholas Maclean, said that given the geographical concentration of Emaar, and taking into consideration the net profit of Dh.442mn during the last quarter, the result seems good.

The company's revenues are down by 65 percent, touching Dh.194bn during the second quarter, compared to Dh.5.60bn during the second quarter of 2008.

Half-year revenues also dropped 57 percent touching Dh.3.49bn from Dh.8.13bn by the end of first-half of 2008.

The Chairman of Emaar, Mohammad Ali Al Abbar, has described 2009 as a challenging year so far, but has emphasized that Emaar is focusing on project delivery and is going ahead to create 10,000 new jobs with its mall and hospitality projects.

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