Damac Properties says full year net profit dropped 25 per cent

Rise in cost of sales, general expenses weigh on profitability

Damac Properties's full year 2017 profit drops 25 per cent. Saeed Azhar / Reuters

Damac Properties, the Dubai-based real estate company, said its full-year net profit fell 25 per cent, weighed down by higher cost of sales, rise in expenses and depreciation charge.

The drop in net income came despite a 4 per cent increase in revenues as the fortunes of Dubai real estate market improved.

Net  profit dropped to Dh2.76 billion in 2017 from Dh3.69bn in 2016, Damac said in a filing with the Dubai Financial Market, where its shares are traded.  Revenues for the 12-month period to December end rose to Dh7.45bn from Dh7.16bn reported in 2016.

Cost of sales climbed to Dh3.82bn during the last financial year compared to Dh3.16bn in 2016 while eneral, administrative and selling expenses increased to Dh1.06bn from Dh859.4 million over the same period, the company said.  Depreciation costs rose to Dh26.4m at the end of last year from Dh15.3m in 2016, it added.

The developer did not give a breakdown for the fourth quarter earnings.

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Damac August awarded a Dh628m contract to build 1,296 villas and a 55 million square feet green development to Arabtec Construction.

Damac Properties' chief executive and founder Hussain Sajwani told Bloomberg last month that he would be "more than happy" to sell as much as 15 per cent of his majority stake in the company to boost the trading in its shares.