Aldar Properties, Abu Dhabi's largest-listed developer, reported a 28 per cent year-on-year drop in the second quarter net profit, dragged down by higher costs and a loss on revaluation of properties. Net profit attributable to shareholders for the three-month period ending June 30 slumped to Dh445m, the developer said on Tuesday in a regulatory filing to the Abu Dhabi Securities Exchange, where its shares are traded. The quarterly earnings missed the lowest analyst estimate of the average of Dh538m compiled by Bloomberg. “During the second quarter 2017, Aldar handed over an exceptionally high amount of infrastructure assets to the government, which also contributed this year, but just not at the same level as last year,” the company's chief financial officer Greg Fewer told reporters in a conference call. Aldar is the developer behind some of Abu Dhabi’s landmark developments including Ferrari World and Yas Mall. The company announced in March a “strategic partnership” worth Dh30bn with Dubai-based Emaar, the developer behind the emirate’s iconic structures such as the Burj Khalifa and Dubai Mall. Direct costs rose 6 per cent to Dh862m during the period from Dh812m reported at the end of the second quarter of 2017. Added costs were in line with growth in revenues and profit margins remained consistent, said Mr Fewer. The company's second quarter profit was also hurt by a widening loss on revaluation of investment properties to Dh189.8m from Dh39.4m a year earlier. "We’ve seen some headwinds in the retail portfolio here. We’ve renewed some leases and our values reflect some revaluation," said Mr Fewer, without providing more details. Net profit for the first six months of the year slipped to Dh1.1 billion from Dh1.3bn at the end of corresponding period last year. _______________ Read more: _______________ Aldar, which has completed the Dh3.6bn acquisition of real estate assets from Abu Dhabi’s Tourism Development & Investment Company, is focused on full integration and completion of the assets for this year, he added. The decline in year-on-year headline earnings was related to “one-off” revaluation losses of Dh190m, of which Dh150m were related to its flagship Yas Mall property as well as lower income relating to the handover of government infrastructure assets, said Ayub Ansari, a senior analyst at Bahrain-based Sico Bank. Profitability could improve in the second half of the year, particularly in the last quarter on the back of the expected “seasonal uptick in hospitality revenues” and increased contributions from its newly-acquired TDIC assets, added Mr Ansari. The Abu Dhabi developer said its second quarter revenue rose 12 per cent to Dh1.5bn, while it advanced 2 per cent to Dh3bn for the first six months of the year, supported by revenue recognition on developments under construction and recent asset acquisitions. Development sales for the first half stood at Dh1.1bn, driven by sales in the Dh10bn Alghadeer development and Reflections, which are currently under construction, the company said. Aldar would look to add Dh1.3bn to its existing capital expenditure programme of Dh5.4bn, which it had outlined fo the next two years, Mr Fewer said. Aldar would conclude its partnership with Emaar in the third quarter of the year, when a decision will be taken on the projects being developed at Saadiyat and Jumeirah Beach Road in Abu Dhabi and Dubai by both developers, he said. Overall, focus will continue to remain on middle-income or affordable housing, with significant demand in those offers, said Mr Fewer.
