Damac Properties said first-quarter net profit plunged 94 per cent extending a decline in performance from last year in the wake of a softer property market and more projects coming online.
Net income for the three months ending March 31 fell to Dh 31.1 million from the same period a year ago, Damac said in a statement to the Dubai Financial Market on Wednesday, where its shares are traded. The company's results missed the lowest estimate of analysts polled by Bloomberg. First-quarter revenues declined 53 per cent to Dh896m..
"We started the year strong with sales of Dh1.2 billion in Q1, 2019, but remained conservative in our approach, to ensure that we are financially agile to take on new opportunities," said Hussain Sajwani, chairman of Damac Properties, without providing a reason for the profit decline.
Damac has struggled to maintain profit growth in the wake of more projects coming online and softer property market conditions. The company, like other developers, is realigning its business priorities to save costs and continue to deliver projects to maintain healthy revenue streams. Property prices in Dubai have steadily fallen over the past two years because of lower oil prices and slower sales, which have crimped the earnings of developers and construction companies.
Damac, which owns and operates the Middle East's sole Trump-branded golf club, said it recently paid down an outstanding Dh1bn Islamic bond.
The developer's full-year profit for 2018 declined 58 per cent, the lowest since Damac shares started trading in 2013.
Last year, Egyptian investment bank EFG Hermes projected operational and financial challenges would put pressure on Damac in 2018 and cash flow issues at the company would send dividends lower, forcing the developer to possibly try and raise debt to meet Dh2.2bn in repayment obligations.