Kuwaiti developer Al Mazaya has another quarterly loss



Naif Al Awadi inherited one of the most unenviable positions in the region when he became the chief executive of Al Mazaya Holding in June. The company's latest earnings statement reveals the difficulty of the task ahead in turning around the company's fortunes.

The Kuwaiti property development and investment company reported a loss of 2.1 million Kuwaiti dinars for the second quarter, its fourth consecutive quarter of losses. The company has turned a profit in five out of the past 11 quarters, and its latest income statement does not make light reading. A collapse in property sales to 35,800 dinars, from 7.5m dinars last year, resulted in sharply decreased revenue for the company.

Investment income more than halved, and losses from joint ventures widened by more than five times to 367,000 dinars. Meanwhile, the company's share of profits from its associates also turned negative, resulting in losses of 134,000 dinars.

A 10 per cent decrease in expenses to 1.5m dinars was one of few positive points. Alongside substantial investments in the company's native Kuwait, Al Mazaya was heavily invested in Dubailand, where a number of property buyers have defaulted after property values fell and grand plans for amusement parks were drastically scaled back.

The company's stock, currently trading at 60 fils a share, has now lost half of its value since the start of the year. Al Mazaya's stock rose 9.09 per cent yesterday following the release of earnings, though despite the rally it has substantially lagged Kuwait's stock market index since the start of the year.

There may be a bright side. Efforts to rejuvenate the Kuwaiti economy, intended to fend off political unrest, may soon start to pay off for the country's property companies, said Majed Azzam, a property analyst at AlembicHC.

"Transactions have picked up significantly, and definitely there's a fundamental recovery in Kuwait," he said. The company has also benefited from an improvement in the property market in Lebanon.

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