Damac reports 23% drop in nine-month 2016 profits
Although some international projects are facing unforeseen delays, Damac still expects to meet the lower end of the range of 2,700 to 3,000 units from incremental deliveries in Dubai
Dubai-based developer Damac Properties reported $762m (AED2.8bn) net profit in the first nine months of 2016, a drop of 23% compared to the same period in 2015.
In a statement to the Dubai Financial Market (DFM), the company said that it recorded revenues of $1.3bn (AED5.1bn) in the period ending September 2016. Gross profit margin stood at 57%, whereas total assets increased to $6.6bn (AED24.3bn) at 30 September, 2016 compared to $6.3bn (AED23.4bn) at 31 December, 2015.
Cash and bank balances stood at $2.4bn (AED8.9bn), whilst development properties were recorded at $2.6bn (AED9.7bn), as at 30 September, 2016.
Net cash generated from operating activities totaled $146m (AED537m) and the nine months earnings per share (EPS) amounted to $0.12 (AED0.47) per share.
With an accelerated delivery momentum in its Dubai core market, the company reports the delivery of over 800 units in the third quarter of 2016 in Akoya by Damac development, bringing the total deliveries for 9M 2016 to over 1,300 units.
Although some international projects are facing unforeseen delays, management still expects to meet the lower end of the guidance range of 2,700 to 3,000 units from incremental deliveries in Dubai, read the statement.
During the reporting period, booked sales reached $1.4bn (AED5.3bn). Q3 2016 recorded $462m (AED1.7bn), showing 5% sequential growth versus Q2 2016 and marginally below Q3 2015.
With these results and the seasonally strong Q4 2016, the management reiterated guidance for full year sales to be greater than $1.9bn (AED7bn).
Hussain Sajwani, chairman of Damac, commented: “The Dubai market remains resilient. The levels of interest in our new product launches and existing portfolio are healthy.
"In line with the visionary leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, the country is reinforcing its position as a leading metropolitan centre attracting businesses and individual investors from the four corners of the globe."
In the first nine months of 2016, Damac added Aykon City to its portfolio of projects, a freehold development on Sheikh Zayed Road.
Sajwani continues: "The market is definitely challenging, investors today are seeking better value. However, with a medium to long term view, we believe that Dubai is well positioned for continued growth, and we expect the city to consistently outperform more established metropolitan centers around the world.
"This outperformance is underpinned by ambitious infrastructure investments, and a stringent and efficient regulatory framework stemming from the Government’s vision to create a sustainable city which enhances the experience of those living, working and visiting Dubai.”
At Cityscape 2016, Damac announced the launch of the 80-storey Aykon Hotel and hotel apartment tower within Aykon City, following the earlier launches of the hotel and serviced apartments tower operating under the Damac Maison brand and the Residences tower within the same development.
Furthermore, in the heart of Akoya Oxygen master development, Damac has launched an array of new products. The Beach at Navitas Hotel & Residences, a new collection of golf and beach-style living apartments designed for the new generation of millennials.
In addition, Damac launched Tower 108 in Jumeirah Village Circle (JVC), a collection of serviced hotel apartments to be managed under the Damac Maison de Ville brand and offering attractive yields for investors seeking exposure to the growing Dubai hospitality sector.
Sajwani concluded: “2016 will be remembered not only as the year of market turmoil and macroeconomic pressures, but importantly for us the year when the community at Akoya by Damac became a reality with the delivery of 1,350 units. A testament to our ambition, capabilities and execution.
"At Damac, we have established ourselves as a market leader firmly positioned in the luxury real estate sector. Adding to this business model that is focused on returns and sales channel innovation, we have powerful differentiators that will support a continued pipeline of unique products with a range of properties and offers to address most
sub-segments of our target customers.”