CAIRO: Talaat Moustafa Group (TMG), Egypt’s biggest developer by market value, reported a 16.7 percent drop in 2010 full-year net profit, the firm said in financial daily Al-Mal on Sunday.
Talaat Moustafa’s 2010 net profit was LE 1 billion, down from LE 1.2 billion a year earlier, while its net revenues soared to LE 5.3 billion from LE 4.8 billion in 2009.
TMG’s fourth-quarter net profit fell to LE 136.4 million from LE 167 million — an 18.3 percent drop.
TMG’s $3 billion Madinaty project has been mired in a legal row since September when a court upheld a ruling that a sale of state land to TMG was illegal because there was no auction.
Building has already started on the Madinaty project, meant to include shops, hotels, homes, schools and a golf course. The plot makes up about two thirds of TMG’s land.
The court’s decision rattled investors and led to copycat challenges to other state land sales.
The firm had said it signed the new contract to replace the scrapped deal last November.
Analysts had previously expected the firm’s sales to be held back in the fourth quarter as investors wait for new legislation to unify state land allocations, which the cabinet had vowed to push for and had already drafted.
In its daily market report, Cairo-based investment bank Beltone Financial said, “Regarding the Madinaty land case, we feel that currently it is quite unclear whether TMG’s new contract will be accepted by the new government or whether there will be a re-examination of the case, exposing the developer to significant risk.”
Madinaty, TMG’s largest residential project, “is the core business for TMG as it holds 66 percent of the company’s total land bank of 50 million square meters,” Beltone addd.
According to a statement, TMG’s CFO Jihad Sawaftah said that the company has stopped sales at its Nasamat Al-Riyad project in Saudi Arabia due to the political uncertainty, and to “preserve TMG’s name and credibility as the company does not want to sell and then face obstacles to deliver.”
The 1.6 billion Saudi dirham project was scheduled for delivery between 2013 and 2016.
TMG’s property sales have slowed down to a very low rate and hotel occupancies are below 30 percent amid ongoing political unrest in Egypt, according to the statement.
The next hearing for the Madinaty land case is on March 29. –Additional reporting by Daily News Egypt