UAE 2008 profits Global report

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Global Investment House (GLOBAL) have released a report on UAE company profits for 2008. Full report has charts and graphs (download, doc, 5 pages).

Press Release 26 April 2009:

UAE Corporate Profitability - FY2008 The year FY2008 was a difficult one for UAE stock markets which started to feel the impact of the global financial crisis, declining oil prices and the overall economic downturn. The combined aggregate performance of both UAE stock markets for FY2008 stood at AED50.04bn compared to AED50.21bn recorded in the previous year, respresenting a 0.33 percent decline. It is worth mentioning that all non-UAE companies have been removed when taking into account total profitabiliy, as well as all companies with a fiscal year not ending on December 31. Sector wise, four out of the six sectors reported declines for FY2008 with the telecommunications sector taking the lead in terms of growth with FY2008 aggregate profits coming to AED8.67bn, a 35.21 percent gain from the previous year. On the other side, the insurance sector was the top decliner, down 59.95 percent with total FY2008 profits standing at AED1.14bn from AED2.86bn recorded in FY2007. The banking sector registered a 2.21 percent drop in aggregate profits for FY2008. The sector contributed the most to overall market earnings with 45.64 percent of total market profit in FY2008. The banks had an aggregate profit totalling AED22.84bn in FY2008 compared with AED23.35bn in the previous year. Emirates Islamic Bank had the highest growth during FY2008, with a 67.94 percent. Profits stood at AED400.58mn and the bank’s total assets increased by 56 percent to reach AED26bn from AED16.9bn in FY2007. National Bank of Fujairah was the top decliner, with FY2008 losses amounting to AED50.30mn compared with FY2007 profits standing at AED323.80mn, a clear indication that the economical crisis has taken its toll on the bank. The bank was the only financial institution in the UAE listed companies that ended the year with a loss. The real estate sector had a total FY2008 profit of AED11.57bn or 23.12 percent of total market profits. Overall, the sector’s profits are down 4.25 percent from the previous year. Emaar Properties, the largest company in the sector, reported a 53.53 percent drop in profits for FY2008 to come to AED3.06bn from the AED6.58bn in FY2007. Standard & Poor's Ratings Service downgraded its long-term corporate rating on Emaar Properties to 'BBB+' from 'A-' and gave it a negative outlook, saying the weakened Dubai property market is likely to affect the company's financial health in the short to medium term. The FY2008 marked one of the most turbulent years for the insurance sector profitability. The sector, which is the top decliner, was down 59.95 percent year-on-year with aggregate profits standing at AED1.14bn compared with AED2.86bn that was recorded in FY2007. 20 out of the 26 insurance companies in the sector posted losses for FY2008 with Arabian Scandinavian Insurance Company posting a AED63.06mn loss for FY2008 compared with a profit of AED84.97mn in FY2007. It is worth mentioning that the company’s assets and investments declined in FY2008 by 26.40 percent and 55.16 percent, respectively. The telecommunications sector realized a 35.21 percent gain in FY2008, and total profits amounted to AED8.67bn compared with AED6.41bn in FY2007. The gain was backed by Emirates Telecommunications Corporation, which saw its FY2008 profits increase by 18.75 percent to stand at AED8.67bn. Net revenue soared to AED26.12bn in FY2008 over AED21.34bn in the previous period while net operating profit before royalty climbed to AED15.21bn, up against AED13.91bn in FY2007. On a quarterly basis, the company made a net profit of AED78mn in the fourth quarter FY2008 compared with a net loss of AED147mn in the same period in FY2007. Emirates Integrated Telecommunications Company recorded its first ever annual profit in FY2008 of AED4.12mn compared with a net loss of AED885.27mn in 2007. Regarding the consumer sector, it reported a 24.33 percent drop in profits for FY2008. Aggregate profits stood at AED599.50mn compared with AED792.29mn that was recorded in FY2007. United Foods Company posted the largest loss among all companies of AED44.41mn compared with a profit of AED12.93mn in FY2007. In the fourth quarter of FY2008, the company posted a loss of AED33.17mn and another loss of AED23.04mn in the 3Q-2008. However, it posted a profit in the first two quarters of FY2008, indicating the company has been feeling the effects of the economic downturn. Finally, the services sector grew by 10.84 percent in FY2008 with profits standing at AED5.22bn compared with AED4.71bn that was recorded last year. Abu Dhabi Ship Building Company recorded a 296.16 percent increase in profits in FY2008 to stand at AED103.18mn backed by a 87.87 percent increase in gross revenues. Further aiding the sector’s growth was Aabar Petroleum Investments Company which realized in FY2008 profits of AED721.59mn, a 218.44 percent increase from last year. Aabar gained AED692mn from divesting last year its oil and gas company, Pearl Energy, raising its net profit to equity holders to AED722mn. In September last year, it signed an agreement to issue AED6.68bn convertible bonds to the International Petroleum Investment Company (IPIC) in a bid to strengthen its capital base to look out for other profitable avenues of investments. The economic slowdown has obviously taken its toll on the UAE markets and economy. However, the government has started to take aggressive measures aimed at building confidence. The UAE Ministry of Finance and Industry has injected AED70bn in the banking system to boost liquidity. The government has also approved a 21 percent increase in spending for the FY2009 budget. The Central Bank of the UAE has setup a new taskforce that could help the country’s financial industry deal with the global economic crisis. Known as the Financial Stability Unit, the taskforce will monitor potential threats to the financial system. All these measures taken by the government are positive enough to gain investors confidence.

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