CAIRO: Real estate firm Egyptian Resorts posted an 80 percent 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 LE 334,257 ($56,076), down from LE 1.6 million for the same period in 2010.
The firm said in an emailed statement that it made a net loss of LE 3.4 million in the second quarter of 2011 despite a 44.5 percent quarter-on-quarter increase in utilities revenue to LE 3.9 million.
"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.
The firm, in a partnership to develop land with Orascom Development Holding (ODH) , made revenue of LE 4.1 million at their Sawari project for a 27 percent 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 percent by mid-summer, compared with lows of 5-10 percent in the February-March period," said Chief Executive Mohamed Kamel.
Shares in Egyptian Resorts fell 1.9 percent before the results announcement, while Egypt’s benchmark share index closed up 0.4 percent.