By Massoud A. Derhally
DHCOG sees huge rise in net profit due to lower costs and expenses, higher revenues
Dubai Holding Commercial Operations Group (DHCOG), the main unit of Dubai Holding, the investment vehicle owned by Sheikh Mohammed Bin Rashid Al Maktoum, reported more than a sixfold increase in its 2012 net profit on the back of lower costs, an increase in revenue and decline in expenses.
DHCOG said net profit last year surged to AED1.2b (US$327m) from a profit of AED204m in 2011, according to an e-mailed statement. Revenues increased 4.5 percent to AED9.2bn in the period from AED 8.8bn. Debt fell by AED1.1bn to AED 11.7bn, with current liabilities declining by about 20 percent, the company said.
"Our turnaround strategy has made considerable strides in 2012 and our businesses across the commercial operations group are increasingly well positioned," DHCOG chairman Mohammad Al Gergawi said. "This, together with the strengthening of Dubai as the region’s financial, business and tourism hub, gives me confidence that we are set for the next phase of future growth.”
DHCOG’s units include Jumeirah Group, TECOM Investments and Dubai Properties Group.
Dubai's economy is rebounding with the property market showing signs of recovery and tourism growing. A partial rebound in the property market, a resurgence in consumer confidence and an improved performance in the banking sector has helped the Dubai stock market reach a 39-month high in February. The publicly listed Dubai Financial Market posted a AED35.2m (US$9.6m) profit in 2012 after recording a loss of AED6.9m the year before.
The economies of the UAE and Dubai, in particular, will continue to expand by about 3.8 percent this year on the back of services, trade and tourism, HH Sheikh Ahmed Bin Saeed Al Maktoum, who chairs Emirates Group, Emirates NBD, and Dubai World told Arabian Business in February. The UAE’s economy was projected to have grown 4 percent last year and is estimated to slow down to 2.6 percent in 2013, according to the International Monetary Fund.
Dubai has about US$110bn in debt amassed during the boom years when it opened up its property market to foreign investors and the government invested heavily in its infrastructure to anchor the emirate as a transportation and logistics hub as well as a financial centre. The property market in the emirate collapsed in 2009 following the subprime crisis in the US that sparked a global credit crisis.
The credit quality of Dubai corporates may benefit on the back of emerging markets growth, high oil prices and access to debt capital markets, Moody's Investors Service said in a new report last month. However, it added that delays in addressing structural issues along with Dubai's US$20bn of direct debt maturing in 2014 remain areas of focus for investors.
Next year "will be a pivotal year" for Dubai as US$20bn of direct government debt related to Dubai World becomes due, the rating agency said. "It will be constructive for the overall environment when clarity emerges as to how these maturities will be addressed, although market expectations that they will be extended are a natural assumption," it said.
"Weaknesses in the institutional framework continue to cloud the picture," Moody's said, adding, "Little progress has been made on clarifying and strengthening the legal framework for insolvencies, debt restructuring, while details of the Dubai government's capacity to support its GRIs remain uncertain."
Might they now pay off some of the trail of debt owed to their contractors, consultants and project managers?
Agreed with above. Amen.