A Gulf-wide plunge in stock prices last year continues to haunt investors, as companies announce significantly lower profitability in their 2006 financial results.
Of the 10 companies that announced earnings yesterday - the last day of the results deadline imposed by the UAE Ministry of Economy - as many as seven posted large declines in net profit. Three, including National Bank of Dubai, had positive earnings growth.
All the decliners have cited losses on their investment portfolios as the reason for lower profitability at the net level, while revenues from core operations have increased.
Mashreqbank - The UAE's fifth-largest bank by assets said profit fell 10 per cent last year as a drop in share prices hit investment income at its Oman Insurance subsidiary. Net income fell to Dh1.57 billion, or Dh18.13 per share, from Dh1.74bn, or Dh20.08 per share, a year earlier.
Total income dropped by nine per cent to Dh2.83bn while total assets grew by 22 per cent to Dh56.7bn, it said.
Oman Insurance - Net profit for 2006 plunged by 73 per cent to Dh202.75 million from Dh755.47m in the previous year. Earnings per share (EPS) fell to Dh0.8 from Dh3.09.
Net operating profit rose by 33 per cent to Dh148.11m from Dh111.77m and total revenue rose by almost 31 per cent to Dh1.05bn from Dh800.26m.
ADNH - Poor performance of stock-market investments pulled the net profit of Abu Dhabi National Hotels (ADNH) down by 12 per cent in 2006 over the previous year's level, the company said.
ADNH posted a lower net profit of Dh292.5m for 2006, but a 22 per cent increase in operating profit to Dh276m, and an 11 per cent rise in revenues to Dh1.2bn.
Shuaa Capital - The Dubai-based investment bank made a profit of Dh50m in the third quarter ended December 31, down by 28.4 per cent from the previous year as stock market-related revenues declined. Its portfolio of funds was hit by a slump in stock markets in the Gulf last year, it said.
Shuaa also said yesterday it signed a preliminary agreement to raise its stake in Qatar's Amwal from 20 per cent to 46 per cent.
Taqa - The Abu Dhabi National Energy Company posted a 39.1 per cent increase in fourth-quarter profit, but full-year earnings fell by 46 per cent to Dh455.2m, compared with Dh842.8m in 2005, it said.
Net income in the three months to December 31 was Dh195.94m, compared with Dh140.89m in a year earlier.
Aabar Petroleum - Profit for 2006 plunged by 84 per cent after the company spent the funds it raised in an initial public offering, a company official said.
Net income in 2006 fell to Dh92.84m compared with Dh608.05m in 2005. Revenue soared ten-fold to Dh935m, compared with Dh92m in 2005 after the firm bought Singapore-listed Pearl Energy.
Al Dhafra Insurance - Net profit for 2006 net profit fell by 52.6 per cent to Dh42m from Dh88.6m in 2005. EPS declined by 52.5 per cent to Dh0.56 from Dh1.18 in 2005.
Revenues rose 24.3 per cent to Dh187.9m from Dh151.2m a year before. Net profit surged 80.5 per cent to Dh19.5m from Dh10.8m in 2005.
Bucking the thread
Three of the financial results announced yesterday bucked the negative trend. National Bank of Dubai (NBD) reported a 46.8 per cent jump in fourth-quarter profit to Dh350.61m compared with Dh238.84m a year-earlier.
This brings the full year's profit to Dh1.106bn, marginally more than the Dh1.103bn the bank reported for 2005. EFG-Hermes has a short-term as well as long-term "buy" recommendation on NBD. The investment bank estimates there is a 31 per cent upside potential to NBD's current share price.
Arab Emirates Investment Bank (AEI) said its net profit for 2006 surged 48 per cent to Dh35.96m from Dh24.29m a year earlier, due to an increase in the fee income from portfolio management and from dealings in international financial markets. The bank's board has proposed the distribution of 15 per cent in cash dividend for 2006.
Oasis International Leasing, the aircraft-leasing company, said its 2006 net profit soared to Dh95.8m from Dh28.1m a year earlier. Operating assets rose by 81 per cent to Dh3.43bn over Dh1.89bn in 2005.
DU spend Dh608m
Emirates Integrated Telecommunications Company (du) said it spent Dh608.5m in 2006 as it invested for its first full year of operations in 2007.
The Dubai-based company has not yet begun sales for the telecommunications services it plans to launch this month. Fourth-quarter costs were Dh280m, the company said.
By Yazad Darasha
© Emirates Today 2007
