Emaar Properties’ first-half profit drops on lower revenue amid pandemic

Despite the uncertain environment as a result of Covid-19, the company achieved property sales of Dh5.1bn during the period

Emaar Properties reported a 35 per cent drop in its first-half net profit. Chris Ratcliffe/Bloomberg

Emaar Properties, Dubai's largest listed developer by market capitalisation, reported a 35 per cent drop in its first-half profit as revenue fell amid a coronavirus-induced economic slowdown.

Net profit for the six months ending June 30 declined to Dh2 billion, the company said in a statement to the Dubai Financial Market, where its shares trade. Revenue during the period slid 22 per cent to Dh9bn. Selling, marketing, general and administration expenses also fell 5 per cent to Dh2bn.

“Our performance in the first half of 2020 has demonstrated our fundamental ability to retain strength and act with agility and speed in the face of the challenges presented by Covid-19,” Mohamed Alabbar, founder and chairman of Emaar Properties, said. “By acting boldly, innovating, revisiting our talent and retaining cash liquidity, I truly believe we have delivered a strong result despite the many challenges we faced.”

The company, known for building landmark projects like Burj Khalifa and Dubai Mall, reported property sales of Dh5.1bn during the period.

As of June, Emaar had delivered a cumulative 64,700 residential units. It is currently developing more than 29,000 residences in the UAE and over 11,000 units across other global markets.

Emaar has a sales backlog of Dh41.7bn, of which Dh29.5bn is in the UAE, to be recognised as revenue in the coming years, the developer said on Wednesday.

Subsidiary Emaar Development reported a net profit of Dh1bn and revenue of Dh4.8bn during the first-half, which were 25 per cent and 23 per cent lower than the respective figures filed in the same period last year.

Emaar Malls’ profit slid 69 per cent to Dh345 million as revenue dropped 26 per cent to Dh1.6bn.

“As the world emerges from Covid-19, I am confident that we will use our strength, talent and business diversity, that we have focused even more intensively on during these challenging times, to face the future stronger than ever,” Mr Alabbar added.

Emaar's international property arm recorded half-yearly revenue of Dh1.72bn, similar to last year's first-half revenue, on the back of “continued successful operations in Egypt and Pakistan, including the launches of [the] Cairo Gate mixed-use development and Panorama tower in Karachi.”

Dubai’s residential property sector faced a challenging second quarter, with social distancing measures, coupled with Covid-19’s economic impact, affecting market performance, according to a recent report by Chestertons. On an annual basis, average apartment prices declined 9.8 per cent, while villa prices fell 7.1 per cent.

“The outlook for Dubai’s residential market will be closely tied to the performance of the wider economy,” the agency said in its report.