Friday, Aug 14, 2009

Gulf News

Dubai: Industry leaders are reasonably happy with the news that UAE banks have performed better than their foreign counterparts during the first half of the year despite feeling the effects of the downturn.

Excerpts:

Ulrich Koegler, principal at Booz and Co, said: "From last year, volumes have been significantly down across the globe. We see the decreases of up to 30 per cent all over the world. In some segments, the loss of business is about 50 per cent or so. That is climatic on a global scale. UAE is now so much in the global economy that it clearly has seen a major outfall of the crisis. This is especially true for the shipping business and with a lesser extent but still quite significant, for the air cargo business.

"The economy in the GCC has been doing bad but much better than the global economy. UAE will always need to look at what's happening in Europe, Asia and in its neighbouring countries. That would very determine the fate of transport and logistics in the UAE, being a major shipment hub and consolidation point on the trade links.

"I think we found at the end of the second quarter. As we speak, we see business stabilising on this lower lever. I would say the worst decline should be now at the bottom. I don't expect for the rest of the year, business going up significantly but I also don't expect it to go any further."

Irfan Ellam, a telecom analyst at Al Mal Capital said: "In terms of revenues and profits, etisalat came very much in line with expectations and du came in ahead of them. Du is doing well in capturing market share, from existing and new subscribers.

Etisalat lost its subscribers in the second quarter. Population is easing; we are beginning to see that with the results.

The third quarter will be interesting for numerous reasons. The population numbers are easing. Some people have lost their jobs but haven't returned to home countries because they didn't have the funds or their children were in school. This will change after the summer and it could put pressure on subscriber numbers. We expect third quarter and fourth quarter to be weaker in subscribers.

"Data revenue on the other hand is growing rapidly. Both operators will see a strong growth in that. Data phones, such as the iPhone, generate up to five times more revenue than regular phones. We expect to see subscriber numbers to come down, but revenue numbers to hold up for third quarter and second half. Population will be the greatest challenge for the sector."

Riad Bsaibes, COO, Amana Contracting, said: "The second quarter has been better than the first in terms of new contracts. In Dubai, there is a slight difference now as there is more liquidity in the system and the banks are a little more interested than in the first quarter. Building materials in the second quarter there was a drop in prices but not the same drop as we saw in first quarter so we see a levelling off in material prices. The big drop was in fourth quarter and first quarter. If we are not yet at the bottom, then we are very close."

Nicholas Maclean, managing director of CB Richard Ellis, said: "On the back of results of companies, especially Emaar's, for those (companies) that publish their results, it hasn't been as bad as expected. If these companies have been able to weather the storm over the last five or six months of the worst market perhaps Dubai and the country has suffered, I think they will be stronger going forward."

By Suzanne Fenton and Nadia Saleem, Staff Reporters

Gulf News 2009. All rights reserved.