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Thu 30 Jul 2009 03:07 PM

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Emaar Properties posts $351m Q2 loss

UPDATE 2: Dubai property giant's chairman says first half of year had been 'extremely challenging'.

Emaar Properties on Thursday posted a $351m second quarter net loss due to a AED1.73bn ($470m) writedown on its US subsidiary John Laing Homes.

The largest developer in the Middle East reported a AED1.29bn loss for the second quarter this year, down from a AED2.12bn profit for the same period in 2008.

It blamed lower revenue and operating profit on the global economic crisis.

"The first half of the year was extremely challenging as we steered the company through new market realities. We succeeded in identifying the right opportunities that co-existed with the challenges and focused on project delivery," Emaar chairman Mohamed Alabbar said in a statement on Thursday.

Despite a tough year for Emaar, Alabbar said the group had created 10,000 more jobs through its mall and hospitality projects.

Shopping malls and retail subsidiary Emaar Malls Group, which opened the Dubai Mall last year, invested AED20bn in job creation, the company said.

Second quarter sales dived 65 percent, from AED5.60bn last year to AED1.94bn in 2009. Second quarter net operating profit sunk 79 percent.

The developer of the world's tallest building, the Burj Dubai, also reported a first half loss of AED1.05bn, down from a profit of AED3.01bn this time last year.

Emaar made no reference to the ongoing merger talks with Dubai Holding units Dubai Properties, Sama Dubai and Tatweer, or the progress being made on its developments.

“These results are worse than expected but it is important to highlight that the revenue mix is diversifying both operationally, in terms of greater recurring income, and geographically,” said EFG Hermes real estate analyst Sana Kapadia.

Rental income in the quarter rose 180 percent on the year.

“While this one off item has resulted in a net loss for the quarter, it would appear to be sensible at this stage, given the underlying weak economic climate,” Kapadia said of the US subsidiary.

“At the same time, we believe further write downs of inventory may occur as the bankruptcy proceedings are wound up.”

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