Damac profits take a tumble in 2017 as cost of sales rises

Damac, the developer behind a Trump International golf course development in Dubai, has reported a sharp decline in profits. (REUTERS)
Updated 14 February 2018
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Damac profits take a tumble in 2017 as cost of sales rises

LONDON: Dubai developer Damac Properties recorded a 25 percent drop in profit last year amid a regional real estate slump.
The real-estate company behind the Trump International Golf Club in Dubai suffered from the rising cost of sales and a decline in margin for international projects following a tricky period for the sector.
In a statement published on the Dubai Financial Market website, the company said full-year net profit fell from 3.69 billion dirhams ($1 billion) in 2016 to 2.76 billion dirhams last year. However revenues rose by 4 percent during the same period, from7.16 billion dirhams to 7.45 billion dirhams.
The report follows a turbulent year for the Dubai property market, with a drop in demand dampening prices amid increased supply as a series of new developments came onto the market.
But the developer remains upbeat, reporting a rise in booked sales, which stood at 7.5 billion dirhams at the end of December compared to 7 billion dirhams in the previous year.
“Dubai’s property market continues to show growth as increasing demand returns to the market, and this is reflected in our booked sales. Our medium to long-term outlook remains positive, with continued local demand as well and stronger interest by international investors,” said Hussain Sajwani, chairman of Damac Properties.
He added that the emirate’s property sector was “feeling the positive effects of the emirate’s appeal and growing sophistication on the world stage. This is evident from the growing real estate sales transactions at Dubai Land Department and we are confident of the growth prospects for the sector going forward.”
So far this year, Damac has delivered 2,304 units, taking its total to 20,236 units to date. Recent completions include new units in Damac Hills, a luxury residential community in Dubai built around the Trump International Golf Club.
Construction is underway on more than 6,500 units at AKOYA Oxygen, a tree-filled community living space designed to promote living in harmony with nature. The development includes The Rainforest at AKOYA Oxygen.
The company also delivered units at new developments abroad, including its two-tower project in Saudi Arabia Damac Esclusiva and The Heights in Jordan.
Damac continued to expand its interests locally and overseas in 2017, activating 226 new brokers and conducting 524 roadshows across 42 countries.
“Our major projects in Dubai including DAMAC Hills, AKOYA Oxygen and AYKON City continue to appeal to expats and international investors alike, while our diverse product portfolio continues to attract a wide variety of buyers for our off-plan and ready properties,” Sajwani said.


Uber narrows loss but is a long way from finding profit, targets India and Middle East

Updated 16 August 2018
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Uber narrows loss but is a long way from finding profit, targets India and Middle East

  • Uber’s net loss narrowed to $891 million in its second quarter ending June 30 from $1.1 billion a year earlier
  • While Uber has retreated from China, Southeast Asia and Russia, it says it is sticking with India and the Middle East

SAN FRANCISCO: Uber said on Wednesday it narrowed its quarterly losses from a year earlier, although the ride-hailing company is still a long way from proving it can be profitable as it gears up to go public in 2019.
Under the leadership of Dara Khosrowshahi, who became chief executive in September, Uber has juggled investing in new markets while retreating from others where it was losing millions of dollars. It is building up services like food delivery and freight hauling as it seeks new revenue, and possibly a path to profitability, outside its core business.
Uber’s net loss narrowed to $891 million in its second quarter ending June 30 from $1.1 billion a year earlier. Its adjusted loss before interest, taxes, depreciation and amortization was $614 million, down from $773 million a year earlier.
Net revenue rose more quickly than gross bookings in the second quarter from the prior period as the company dialed back on promotional subsidies of rides.
But its growth faces risks from decisions like that by New York City this month to cap licenses for ride-hailing services for one year. Uber has also had to grapple with corporate scandals and has lingering and costly legal battles, including over its classification of drivers as independent contractors, and federal probes to resolve.
“I remain unimpressed,” said Brent Goldfarb, associate professor of management and entrepreneurship at the University of Maryland. Improving losses by cutting “the lowest hanging fruit doesn’t mean the underlying model is profitable.”
The company’s most recent valuation was pegged earlier this year at $72 billion. But that was based on Uber becoming the global winner in ride-hailing and logistics, a vision it has retrenched from, and public investors may see a smaller company worth less.
Uber can expect a valuation haircut in an IPO if it does not show more progress toward becoming profitable, said David Brophy, professor of finance at the University of Michigan.
Adjusted losses in the first quarter were $312 million, excluding gains from Uber selling some overseas businesses to local competitors. The sale of its Russia and Southeast Asia operations resulted in a one-time $2.5 billion gain in the first quarter and lowered second-quarter costs.
Under pressure from its board, Uber has endeavored to find more savings after years of a growth-at-all-cost mentality under prior CEO Travis Kalanick, enabled by billions of dollars in private investment.
The company had $12 billion in quarterly gross bookings, which includes rides and Uber Eats, up 6 percent from the previous quarter and about 40 percent from a year before.
Net revenue, which strips out what gets paid to drivers as well as promotions and refunds, was $2.8 billion, up 8 percent over the first quarter and more than 60 percent from last year.
“We had another great quarter, continuing to grow at an impressive rate for a business of our scale,” Khosrowshahi said in a statement.

STICKING WITH INDIA, MIDDLE EAST
Uber is a private company and not required to publicly disclose financials, but recently boosted transparency by starting to release selected figures as it eyes an initial public offering.
Faced with criticism about flooding cities with cars, Uber is spending on bike and scooter rentals, including its acquisition of JUMP electric bikes in April.
While Uber has retreated from China, Southeast Asia and Russia, it says it is sticking with India and the Middle East, tough markets with strong local competitors.
“We are cementing our leadership position in India and the Middle East,” Khosrowshahi said.
Several Uber investors have told Reuters they want Uber to leave these costly markets too and focus on North America, where US-based Lyft continues to pose a threat, and pull back on ancillary businesses like Uber Freight.
Uber has $7.3 billion in cash on hand, up a billion dollars from the end of the first quarter. The company listed an inflow of $1.5 billion from term loan issuance, net of costs.
(Reporting by Heather Somerville; Editing by Meredith Mazzilli)