Dar al-Arkan Q3 net profit falls 21pct

Saudi Arabia's biggest property developer Dar al-Arkan Real Estate Development Co missed forecasts as it posted a 21.4 per cent drop in its third-quarter net profit due to falling sales, the company said on Wednesday.

The firm made a net profit of 227.5 million riyals ($61m) in the three months ending September 30, compared with 289.6m riyals in the same period a year earlier.

Analysts surveyed by Reuters expected the firm to post, on average, 258.95m riyals in the third-quarter.

"The decline in third quarter net profit... is due to declined sales as the company seeks to improve profit margins for its land bank, in addition to declining sales of housing units due to the shortage in completed units for sale," it said.

The firm's operational profit for the third-quarter declined by 14.8 per cent to 289.9m riyals compared with 340.3m riyals in the same period a year earlier.

Its chairman, Yousef al-Shalash, told Reuters last week that he expects the company to post better results toward the end of 2011 and during 2012 as sales and rents improve, both of which were negatively affected over the past three years.

Dar al-Arkan will also diversify its sources of income over the next three years to reduce its reliance on land sales and increase its rent and housing unit income.

Around 80 per cent of Dar al-Arkan's assets of about 23 billion riyals are land plots in the kingdom, where analysts say properties are hard to value.

Dar al-Arkan said last week the Public Investment Fund (PIF) approved a 4bn riyal ($1bn) facility to finance one of its major projects in the red sea port of Jeddah, Saudi Arabia's second largest city.