DI reports 46% drop in profits

Dubai Investments, a large investment firm, reports second-quarter profits dropping 46.4 per cent to Dh296.4 million.

DI has holdings in almost 50 UAE-based companies in sectors such as property, retail and manufacturing.

DUBAI // Dubai Investments (DI), one of the emirate's largest publicly listed investment firms, yesterday said its second-quarter profits dropped 46.4 per cent to Dh296.4 million (US$80.6m). For the first six months of this year profits almost halved to Dh587.3m from Dh1.04 billion a year earlier. It was a further sign that investment firms are struggling to maintain profitability as the economy contracts with falling property prices and weak demand for building materials and industrial products.

"In 2009, we are not going to reach 2008 profits but we believe we will end up making a profit around Dh1.1 billion to Dh1.2bn, more or less. This is a conservative estimate," Khalid bin Kalban, the chief executive of DI, told Reuters. "We believe 2010 will be another difficult year. We still haven't detected many positive signs in the market." Earnings per share for the second quarter dropped to Dh0.08, compared with Dh0.14 for the same period last year, according to a statement on the website of the Dubai Financial Market.

DI has holdings in almost 50 UAE-based companies in the property, industrial manufacturing, retail and trade sectors. It has set up new coated-glass plants and expanded its capacities in steel fabrication, district cooling, crane services and building products. It has traditionally invested in companies at an early stage and has large exposures to the property and stock markets. Property accounts for about half of its assets.

The company did not book any profits from the sale of properties this year. For the same period last year, DI generated Dh776.5m from property holdings. "The firm is not generating enough [earnings] through its underlying portfolio, which is reflected in the drop in profitability," said Ali Khan, the managing director at Arqaam Capital in Dubai. DI's total assets stood at Dh14.59bn for the second quarter of this year, against Dh12.79bn for the same quarter last year.

Established in 1995, the firm is closely linked to the Dubai Government. Investment Corporation of Dubai is the largest private stakeholder in the firm, with an 11.5 per cent stake. The firm is 68.72 per cent held by the public. DI shares yesterday closed unchanged at Dh1.20. [e-mail]