Talaat Moustafa falls on poor profit results

What's Down: Egypt's largest publicly traded property developer slumped to its lowest close in more than six months.

Egypt's largest publicly traded property developer slumped to its lowest close in more than six months after its nine-month profit shrank by almost 43 per cent.

Talaat Moustafa Group (TMG) stock lost 3.5 per cent to close at 3.29 Egyptian pounds, its lowest price since May 12.

Egypt's EGX 30 Index declined 1.4 per cent.

TMG's net income in the nine months ending on September 30 declined to 493.7 million Egyptian pounds from 863.6m pounds in the same period last year, the company said in a filing to the Egyptian Exchange yesterday. Sales fell to 2.1 billion pounds from 2.9bn a year earlier.

Property developers have been reeling from a string of legal tussles over purchases of state land under Egypt's former president Hosni Mubarak.

TMG's US$3bn Madinaty project, which makes up the bulk of its land bank, has been involved in a land dispute since September last year, when a court upheld a ruling that scrapped a sale of state land to TMG because the property had not been auctioned.

The cabinet, however, returned the land to the company under a new deal on the same terms. But since the ousting of Mr Mubarak and his cabinet, the fate of that contract is unclear.

Egypt's administrative court is expected to rule next Tuesday on whether TMG will be allowed to keep the 3,300-hectare plot on the outskirts of Cairo.

In September, a court withdrew steel production licenses from three companies, including Egypt's biggest publicly traded manufacturer of the metal, Ezz Steel, whose former chairman, Ahmed Ezz, was sentenced to 10 years in prison for irregularities in obtaining the licences from the government.

"The company's sales were encouraging, in spite of the land issue," said Ankur Khetawat, an analyst at AlembicHC in Dubai.

TMG owns four major hotels, three of which are Four Seasonsproperties. The fourth is the Nile Hotel.

All are being hurt by a decline in tourism in the country.

Egypt's tourist arrivals in August declined 3 per cent to just over 910,000 from 940,000 in July, according to the country's central agency for public mobilisation and statistics.

"Hotel revenues were not really strong, which shows tourism in the country is still really weak and affecting TMG's margins," Mr Khetawat said.

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