A drop in the delivery of homes and offices in the world's tallest building contributed to a 45 per cent fall in first-quarter profits at Emaar Properties, the largest developer in the region.
The company announced net profits of Dh421 million (US$114.6m) for the first three months of the year but suffered a dip in revenues because of a lower delivery of homes and offices and a greater loss from associated companies in the quarter.
Emaar said it handed over 270 units in the Burj Khalifa and other projects, compared with more than 1,300 in the first three months of last year.
The company had revenues of Dh1.98 billion, compared with Dh2.88bn in the first quarter of last year. Some of this was driven by the handover of offices in The Eighth Gate development in Syria, which is experiencing growing turmoil.
Mohamed Alabbar, the chairman of Emaar, said the company would "explore growth opportunities in key emerging markets, where our emphasis will be to create dynamic socio-economic growth engines like Downtown Dubai that create jobs, support ancillary industries and meet lifestyle aspirations".
Dubai Mall welcomed 13.5 million visitors in the first quarter, its highest number since opening in November 2008, Emaar said. The Address Hotels and Resorts, one of its hospitality brands, recorded an average occupancy of 87 per cent in the period.
Emaar's shares slid 1.4 per cent yesterday on the financial disclosure, closing at Dh3.44. The shares are down 3.1 per cent for the year.
The company posted worse than expected earnings last year after booking Dh417m in provisions for the fourth quarter. Fourth-quarter profits slid by 62 per cent to Dh274m compared with the same period in 2009 after two partly owned companies wrote down the value of their assets and costs rose.
Emaar more than doubled provisions compared with the same period in 2009, after Amlak Finance and Dubai Bank, both affiliated companies, wrote down the value of their assets, an Emaar spokesman said.
"The provisions primarily relate to provisions made by both these entities in respect of their assets," the spokesman said.
Amlak, which was once the largest lender to homebuyers in the UAE but stopped issuing loans two years ago, had until this year refused to revalue almost Dh4bn of property investments and advance payments on unfinished developments. Emaar owns a 66 per cent stake in the company.
Emaar was also dealing with the rising cost of doing business, an income statement published yesterday showed. While its revenues increased by 28 per cent to Dh3.8bn in the final three months of last year from Dh2.98bn in the same period in 2009, its cost of sales rose by 69 per cent to Dh2.6bn.
Emaar has emerged as one of the strongest property developers in the UAE. While its competitors have had difficulty making a recurring profit, Emaar has been bolstered by revenues from retail, hotels and malls. About a quarter of its revenues last year were from these three categories, the company said.
It reported net profits of Dh2.4bn for last year, compared with Dh327m in 2009, when it wrote off huge investments in John Laing Homes, a US property company.
Emaar has also been raising new finance in recent months, with the issuance of a convertible bond worth $500m in September and a $500m sukuk last month.