Dubai-based developer Union Properties has reported a net profit in Q2 2022 as it turnaround strategy was able to achieve significant cost savings.
Revenue from contracts with customers remained stable at AED99 million in Q2 2022 compared to the same period last year, as the group’s subsidiaries delivered healthy performance improvements, supported by strong market dynamics in the UAE’s real estate sector. Gross profit for the same period increased 7% to AED14 million, the company said.
Union Properties continued to make strong progress in the execution of its turnaround strategy, delivering significant cost efficiencies during the second quarter of the year. Administrative and general expenses declined by 42% year-on-year to AED17 million in Q2 2022, and by 32% to AED37 million in H1 2022, compared to the same period last year.
As part of its ongoing strategy to improve efficiency and productivity across the business, Union Properties merged three of its existing business units - Edacom Owners Management Association, Uptown Mirdiff Mall, and Al Etihad Cold Store - into one single entity, Edacom Asset Management. The consolidation is expected to improve profitability by driving efficient resource and asset utilization, economies of scale and cost rationalization.
The company expects to realise additional one-time cost savings of AED7 million over the next 12 months from the reorganisation, it said.
Consequently, operating profit increased to AED3 million in Q2 2022 from a loss of AED36 million for the same period last year. At the net income level, Union Properties delivered a net profit of AED285,000 in Q2 2022 (Q2 2021: AED26 million), compared to a net loss of AED12 million in the preceding quarter, despite incurring finance costs related to legacy debt of AED16 million, representing 14% of the company’s total consolidated costs. Debt restructuring remains a key priority for Union Properties’ management, it added.
Management’s focus on efficiency has enabled Union Properties to preserve its book value at AED1.9 billion, equivalent to AED0.446 per share.
Amer Khansaheb, Board Member and Managing Director of Union Properties, commented: “The continued improvement in Union Properties financial performance reflects our success to date in executing our turnaround strategy. We remain laser focused on driving growth and delivering cost efficiencies, particularly at a subsidiary level. Of note, we have launched a number of initiatives to optimize performance across the business, including the consolidation of three of our business units into Edacom Asset Management, which is expected to deliver significant cost savings over the remainder of the year. The work underway lays a solid foundation for future growth and value creation for our shareholders.
“Union Properties owns a vast land bank, in a fast-developing location, which is gaining traction and popularity with investors and residents. Looking ahead, we are cautiously optimistic as we explore a number of development options that we expect to generate long term value for our investors.”
On October 24, 2021, Union Properties disclosed to Dubai Financial Market an arbitration claim filed by one of its subsidiaries, which is still being reviewed by the arbitral tribunal. As part of the company’s commitment to transparency, it will continue to keep the market and the shareholders updated on any further developments, it said.
Copyright 2022 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (Syndigate.info).