Egyptian Resorts profit tumbles 80%

Real estate firm Egyptian Resorts posted an 80 per cent decline in first-half net profit as growing revenues from tourism and utilities failed to compensate for the firm's inability to sell land since 2008, analysts said. Egyptian Resorts, which makes most of its money selling land to developers, reported consolidated first-half net profit of 334,257 Egyptian pounds (Dh205,723), down from 1.6 million pounds for the same period in 2010. The firm said in an emailed statement that it made a net loss of 3.4 million pounds in the second quarter of 2011 despite a 44.5 per cent quarter-on-quarter increase in utilities revenue to 3.9 million pounds. "The company has not been able to sell any land since the 2008 financial crisis, which is its primary revenue generator, and revenues from other areas are too small to compensate," said Hisham Halaldeen, an analyst at Naeem Brokerage. Article continues below The firm, in a partnership to develop land with Orascom Development Holding (ODH) , made revenue of 4.1 million pounds at their Sawari project for a 27 per cent increase quarter-on-quarter. "Egyptian Resorts was depending on the launch of the Sawari project for a revival of sales in 2011," Halaldeen said. "However, with the political tensions, the company shelved the launch ... until it sees a clearer picture on the tourism front." In April, the tourism development authority retracted approval for selling land to the firm for Sahl Hasheesh, its main project, along the Red Sea coast. The firm has said it would contest the decision. The legality of Sahl Hasheesh is being contested after a lawsuit was filed saying the government broke the law in selling the land to the firm. Occupancy rates at Sahl Hasheesh hotels "rose steadily over the last quarter, averaging 70 per cent by mid-summer, compared with lows of 5-10 per cent in the February-March period," said Chief Executive Mohammad Kamel.