Emirates posts significant drop in profits, at $237 million

Emirates is the biggest airline in the Middle East. (AFP/File)
Updated 09 May 2019
0

Emirates posts significant drop in profits, at $237 million

  • The parent company of Emirates also had a 44% drop in profits
  • Emirates said operating costs increased significantly

DUBAI: The Middle East’s biggest airline, Emirates, said on Thursday that profits were down almost 70% in the past fiscal year, reaching lows of $237 million, compared to last year’s whopping $762 million.

The Dubai-based airline’s parent company Emirates Group also posted lower profits at $631 million, down 44% from last year.

Despite the dip in profits, revenue reached record highs of nearly $30 billion for Emirates Group. Revenue for the airline was slightly up at $26.7 billion.

The company said operating costs had increased substantially as it footed its biggest-ever fuel bill at more than $8 billion on the back of oil prices that climbed 25% higher over the last year.

The company said a strengthened US dollar, lower airfreight demand and weakened travel demand also contributed to eroded 2018-19 earnings.

Emirates Airline and Group chairman and chief executive, Sheikh Ahmed bin Saeed Al Maktoum, acknowledged in a statement that the past fiscal year “has been tough, and our performance was not as strong as we would have liked.”

The company released its earnings in a statement, saying it invested about $4 billion in new aircraft and equipment, the acquisition of companies and other initiatives compared to the previous year’s $2.5 billion in similar spending.

Among the major purchases was a commitment for 70 new Airbus planes worth $21.4 billion at list prices to be delivered over the next five years. The company also made slight increases in its total workforce, employing a total of about 105,300 people.

Emirates Group additionally operates the global dnata — or Dubai National Air Transport Association — ground and travel services provider. That division of the company had revenues of close to $4 billion and profits of $394 million.

“It’s hard to predict the year ahead, but both Emirates and dnata are well positioned to navigate speed bumps, as well as to compete and succeed in the global marketplace,” Al Maktoum said in a statement.

Al Maktoum is also chairman of budget carrier flydubai, which has a codeshare agreement with Emirates. While the two airlines operate independently, both are owned by the state-owned Investment Corporation of Dubai.

Emirates Group said it declared a dividend of $136 million to the Investment Corporation of Dubai from its latest fiscal year earnings.

The aviation, travel, tourism and leisure industries are key pillars of Dubai’s economy, which has seen a slowed down pace of growth, declines in real estate prices and companies cutting costs either by firing employees or freezing hiring as non-oil businesses struggle with delays in payments down the supply chain.

Emirates airline’s aggressive expansion and growth has helped transform its hub at Dubai International Airport into the world’s busiest for international passengers. The airline said it carried 58.6 million passengers this past year, nearly the same as the year before.


Jubail petrochemical complex could lead to homegrown car industry

Updated 49 min 35 sec ago
0

Jubail petrochemical complex could lead to homegrown car industry

  • Advanced Petrochemical said it signed a memorandum of understanding with SK Gas to build a propane dehydrogenation and polypropylene complex
  • The project is expected to produce high value plastics grades for the automotive industry as well as other specialized grades that are currently being imported into Saudi Arabia

LONDON: Advanced Petrochemical and South Korean SK Gas plan to develop a $1.8bn petrochemical complex in Jubail that could help plans to develop a homegrown car industry in Saudi Arabia.
It comes amid increased economic cooperation between Riyadh and Seoul following an $8.3 billion economic co-operation pact struck this week during the first visit of Saudi Crown Prince Mohammed bin Salman to South Korea.
The Saudi petchem producer said it signed a memorandum of understanding with SK Gas to build a propane dehydrogenation and polypropylene complex. The project is expected to produce “high value plastics grades for the automotive industry” as well as other specialized grades that are currently being imported into Saudi Arabia, Advanced Petrochemical said in a filing to the Tadawul stock exchange on Wednesday.

 

Separately the company said it has received propane feedstock allocation from the Kingdom’s Ministry of Energy, Industry and Mineral Resources for the project, which is slated to start in 2024.
Advanced Petrochemical also disclosed in a third filing that it was conducting a feasibility study for a cracker project in the Kingdom.
These latest deals reflect twin objectives to develop high-value manufacturing in the Kingdom to create jobs while also investing heavily in the petrochemicals sector to capitalize on rising global demand for high value plastics.
Saudi Arabia is the largest new automotive sales and auto parts market in the Middle East, accounting for an estimated 40 percent of all vehicles sold in the region, according to the US export.gov website.The addition of potentially as many as 3 million women drivers to the roads is expected to further spur domestic demand.
Saudi companies, spearheaded by Saudi Aramco, are investing billions of dollars in petrochemical projects worldwide to meet rising global demand. Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then, according to the International Energy Agency (IEA).
Demand for plastics — the key driver for the petchem industry — has outpaced all other bulk materials (such as steel, aluminum, or cement), nearly doubling since 2000, the IEA estimates.

FACTOID

40% - Saudi Arabia is the largest new automotive sales and auto parts market in the Middle East, accounting for an estimated 40 percent of all vehicles sold in the region.