Emaar EC incurs SAR 282 mln losses in Q1 2020

Emaar The Economic City (Emaar EC) incurred net losses after Zakat and tax of SAR 282 million for Q1 2020, versus net profits of SAR 7 million a year earlier.

The losses were sustained as revenue from a major sales transaction was not recognized in the current quarter, due to contractual terms. It will be reflected in future quarters.

This led to a decrease in revenue and gross profit in Q1 2020, along with slowdown of economic activities in the real estate sector in addition to the COVID-19 outbreak.

Furthermore, the unprecedented pandemic has also resulted in an impairment of SAR 89 million on properties available for sale and lease during the current quarter, affecting gross profit and operating income.

Emaar EC also recorded higher financial charges, due to a decrease in the capitalization of borrowing costs.

Net losses after Zakat and tax widened by 26.4% from SAR 223 million in the previous quarter, on a decline in new awards of residential and industrial projects, when compared to Q1 2019.

Moreover, the overall economic slowdown, in addition to prevailing COVID-19 pandemic, also resulted in an impairment of SAR 89 million on properties available for sale and lease during the current quarter.

The real estate developer also reported a lower profit share from its affiliate, Ports Development Co. (PDC), due to loss on revaluation of interest rate swap hedging arrangements made by PDC amid falling SIBOR rate.