Dar Al-Arkan made a net profit of SR297.8 million ($79.4 million) in the three months to end-June, compared with SR437 million a year earlier, it said in a statement posted on the bourse website on Wednesday.

Analysts surveyed by Reuters expected on average the company to post a net profit of SR326.6 million for the quarter.

"The decline in second-quarter net profits ... is due to lower sales as the company tries to improve profit margins at its stock land plots," the firm said in the statement.

Operational profit dropped 37.9 percent to SR305.7 million in the quarter.

Some 80 percent of Dar Al-Arkan's assets of about SR23 billion are land plots in the Kingdom, where analysts say properties are hard to value.

Saudi Arabia is facing a housing shortage and plans to build 500,000 new homes to cater for its growing population of over 27 million.

A report by Banque Saudi Fransi in March said developers needed to build about 275,000 units a year through 2015 to meet demand in the world's top oil exporter for about 1.65 million new homes.