Dar Al Arkan profits fall by more than half for Q3
Saudi developer suffers sales slump eight months after sukuk issuance
Saudi Arabia’s biggest real estate company by market value, Dar Al Arkan Real Estate Development Company, has seen profits fall more than half for the third quarter against last year, citing a slump in sales.
The developer of Al Mashaer Towers posted net income of to SR289.6 million, down 53% from the SR616.2 million from the same period last year, andslipping 32.2% for the first nine months of the year. Gross profit has fallen more than 47% to SR374.9 million for the third quarter, with operational profits down 48.9% - SR665.5 million to SR340.3 million.
“The decrease in net income during the third quarter compared to the corresponding quarter last year is mainly due to the lower volume of the land and residential unit sales.
The company also attributed the “seasonal factor” of Ramadan occurring in the middle of summer, along with the geographical locations of the units for sale. In February the company raised SR1.7 billion on the debts markets through a sukuk, an Islamic bond, launched to support the company’s policy of project expansion through “medium and long-term financing solutions”.
The company’s current residential projects include Shams Al Arous in east Jeddah, which will cover 300 hectares, Al Tilal villas in the south of Madinah, and the US $1.6 billion Shams ArRiyadh in the Kingdom’s capital. The company has not provided any photographs of the construction progress of the site of Shams ArRiyadh beyond November 2008.
The company’s stock price has fallen 46% in 12 months and just over a fifth since the start of the third quarter. Yesterday the share price fell 1.5% to SR9.2.