Aldar profits fall close to 80% as market slows

ABU DHABI // Aldar Properties saw its profits fall by 78.2 per cent in the second quarter compared to the same period last year, down to Dh253.8 million (US$69.1m), as the company weathered a protracted slowdown in the market. Most of the profit for the quarter was from previous sales that are being recognised now that homes are being delivered. The largest developer in Abu Dhabi had no sales of land or units in the quarter and a Dh22m operating loss, said Shafqat Malik, the chief financial officer.

"The short term is very challenging," Mr Malik said. "That is why we are making sure we are managing our resources and the execution of the projects over the next three to six months. In the medium to long term, we are very positive about the fundamentals of Abu Dhabi." Mr Malik said the company's liquidity position was strong, especially after raising Dh4.59bn with a corporate bond. The company now has Dh13.9bn in cash and bank balances.

He also said that despite the slow market, Aldar had sold units worth about Dh200m in the first six months of the year and would be recognising the revenue in future quarters as it delivered the units. Buyers of Aldar's properties were having some difficulty in paying their instalments on time, Mr Malik said. Between 10 and 15 per cent of the money owed to the company was overdue. Ahmed Ali al Sayegh, the chairman of Aldar, said the financial results of the quarter showed "the resilience and underlying financial strength of the Aldar business model".

Over the next six months, the company is scheduled to pass several milestones, including the delivery of the Yas Island facilities and hotels in time for the inaugural Abu Dhabi Formula One Grand Prix. One big issue that could affect property developers is the valuation of their land bank, which amounts to millions of square metres for developers like Aldar. Analysts say that companies may have to take impairments on these assets because prices have dropped precipitously.

In a statement yesterday, Aldar said its net asset value had increased by 5.1 per cent to Dh16.85bn in the first half of the year, compared to the same period last year. Revenue for the first half of the year for the company was Dh1.1bn, with profit of Dh1.14bn. The value of developments under Aldar's shares shed Dh0.09 in trading yesterday, closing 2.2 per cent down at Dh4. @Email:[e-mail]