Deyaar profits plunge 95% after a year of volatility

The development firm reveals a massive decline in profits after a year of volatile market conditions and unprecedented threats to the global financial system.

Deyaar Development last night revealed a massive decline in profits after what it said was a year of volatile market conditions and unprecedented threats to the global financial system. The company reported net profits of Dh30 million (US$8.1m) for last year, down 95 per cent from the Dh645.7m it earned in 2008. "In the face of unprecedented threats to the stability of the global financial system, the worldwide real estate sector witnessed a range of significant challenges in 2009," said Markus Giebel, the chief executive of the Dubai-based property developer.

"Despite such volatile conditions, Deyaar successfully handed over eight projects last year, including a Dh363m project in Lebanon." Analysts had dubbed Deyaar a leader in the market last year in response to its proactive strategy to reduce defaults. Deyaar credited this consolidation strategy with reducing defaults and creating a higher paid-up value for each of the company's sold and consolidated units, helping it create a "continuously positive operational cash flow".

At the onset of the financial crisis in 2008, Deyaar was facing major financial challenges and a corruption inquiry that led to its chief executive being arrested on charges of financial impropriety. Since then, the company has rebranded, shifted management and put a strategy into play that would safeguard Deyaar's future, Mr Giebel has said. Deyaar reported gross revenues of Dh1.83bn for last year, an increase of 33 per cent compared with 2008. The total equity of the company stood at Dh6.75bn as of December 31 last year.

The company is scheduled to hand over six projects this year. "In 2010, Deyaar will continue to focus on the completion of the consolidation of its projects and timely collections of its receivables at home in the UAE, while simultaneously identifying strategic expansion opportunities overseas, including potential future opportunities in regional markets such as Lebanon and Saudi Arabia," Mr Giebel said.