Dubai Investments hit as revenues decrease
Dubai Investments posted a 54 per cent drop in second-quarter profit from a year earlier as contract revenue declined and losses on the fair valuation of its investments worsened.
The conglomerate, in which the sovereign fund Investment Corporation of Dubai owns an 11.5 per cent stake, reported a profit of Dh63.4 million, down from Dh138.3m last year.
Contract revenue was down to Dh86m, from Dh146.3m last year. Losses on fair valuation of investments surged to Dh14.9m compared with Dh2.6m.
The company has holdings in more than 40 companies across the glass, food, pharmaceuticals, metals, rubber, property and financial industries among others. Its firms include Emirates Float Glass, Marmum Dairy Farm, Emirates Building Systems, Abu Dhabi Investment House and Al Mal Capital.
Dubai Investments has suffered since the emirate's property market downturn in the wake of the 2008 global financial crisis, depressing house prices by more than 60 per cent in some areas.
"The company expanded rapidly, with many of the industries they invested in related to real estate. When the property crisis in Dubai happened, all those industries, such as cement or glass, were also hurt," said Wadah Al Taha, the chief investment officer at Al Zarooni, an investment company in Dubai.
Against a sluggish local investment backdrop, Dubai Investments sought to expand activity beyond the GCC and into countries such as Egypt, Libya and Syria to take advantage of rising growth there. But that strategy backfired when unrest erupted, forcing businesses to put plans on hold and causing customers to default on payments.
Ambitious plans to spin off some of the company's subsidiaries, such as its private equity arm M'Sharie, have been put indefinitely on hold because of weak market conditions.
Despite its declining profit, Dubai Investments in March said it was looking to raise as much as Dh1 billion this year through the issue of an Islamic sukuk to finance the expansion of its manufacturing units and to repay debt.
Shares have advanced 28 per cent so far this year, compared with a 16 per cent average increase for the Dubai Financial Market General Index.
The stock rose 1.8 per cent yesterday to close at 77 fils a share.
Published: August 6, 2012 04:00 AM