- 13% increase in Revenues for 9 Months period year on year
- 26% increase in Gross Profit for 9 Months period year on year
- High pressure from increase in provisions on doubtful debts and Financial Charges leading to a net loss of approximately SAR 303 million for 9 Months period
KSA: Emaar Economic City (EEC), a Saudi Joint Stock Company, today issued its third quarter results for the period 1 July to 30 September 2019 and its nine months results for the period ended 30 September 2019.
For the nine month period (year to date), EEC has seen an increase of 11% in Revenues to SAR 718.7M (SAR 636.7M same period year ago) and a Gross Profit of SAR 221.6M (vs. SAR 176M same period last year). The overall increase was primarily attributed to the increase in sales achieved in Residential / Industrial sector and launch of new operating assets.
In the third quarter of the year, Revenue from projects’ sales was SAR 92M, an increase of 75% compared to same period last year. The increase in project revenue from Q3 2018 is mainly due to rising demand for KAEC products resulting in high sales increase across residential and industrial sectors.
Simultaneously, in the third quarter of the year, Revenue from operating assests was SAR 71M, an increase of 20% compared to same period last year. The increase in operating revenue is driven by the city continuing to develop into a popular tourism destination generating more hospitality & leisure assets revenues (The Views, Oceana Resort, 4D Theatre, Bay La Sun Water Park Yam Beach).
Overall, the Company recorded a 167% increase in Gross Profit in Q3 2019 of SAR 12M compared to same period last year. The increase in Gross Profit from 2018 is a combination of increased sales of Residential Land units which have a high gross margin SAR 43M vs. SAR 17.5M same period year ago, coupled with reduction of losses on Operations (reduced from -35M Q3 2018 to -32M Q3 2019) which is attributed to new leisure & hospitality assets coming online along with better cost management to its operations.
The Company continues to have a strong array of inventory having a market value of approximately SAR 3B and projects under progress with a value of around 2B (Work in Progress), and is in the process of launching new projects be it residential units, affordable housing and land plots within the short term maintaining a healthy supply of product available to cater to the surge in demand.
During the year EEC has launched over SAR 509 million of new projects including SAR 359 million worth of residential projects (Orchids & Azalea), SAR 150 million worth of Commercial mixed used Land projects. Further a total of app. SAR 50M has been spent on education and leisure sectors to enable the King Abdullah Economic City to further position itself as a place for quality living, premier leisure, and preferred destination for doing business.
“This year EEC has witnessed high increase in sales, strong cost optimization, while continuing to invest on the path to maximizing future value. From a value perspective, the Company has invested approximately SAR 18 billion since inception which has created at least 12x value to the investment properties based on independent valuation conducted by three renowned entities standing close to SAR 50 Billion as recorded in audited financial statements for the year ending 31 Dec 2018,” said Ahmed Linjawy, Group CEO of KAEC. “The losses incurred are attributable primarily to the nature of the city development that hosts a large array of projects, which requires significant infrastructure spend with an eye towards realizing its full potential, most importantly the logistics and industrial services that includes King Abdullah Port (KAP) the biggest port on the red sea in terms of capacity, and the Industrial Valley (IV) which has attracted the biggest international companies, such as, Mars Saudi Arabia; the largest chocolate manufacturer in the world, Pfizer Saudi Arabia and Sanofi Aventis; the world’s leading pharmaceutical giants, Total; one of the world’s largest lubricant companies, and the less continues to expand.”
The company has been marching ahead, year over year, developing enablers that further enhance KAEC’s value in terms of assets and good will. This value will be unlocked with additional investments on strategic projects by both, the Company and the third-party developers. Future absorption of such costs by the new development will improve our financial performance”.
As a city developer, EEC already has an investment of SAR 2.4B (book value) in its infrastructure. EEC balance sheet remains sustainable with total assets of SAR 18.1 billion as of 30 September 2019.
© Press Release 2019