Egyptian Resorts profits rise 18 per cent on services

Reuters, Tuesday 29 Mar 2011

Land sales stall but other operations bring gains for tourist-focused developer

Real estate company Egyptian Resorts reported an 18 per cent rise in unconsolidated 2010 net profit and said it expected tourism to recover after taking a hit from the country's political turmoil.

The company previously made most of its money selling land in a large plot on Egypt's Red Sea coast to tourism-focused developers. But it has not sold any land since the third quarter of 2008, when the global financial crisis hurt the real state market.

Instead, revenue from its services operations, such as its water and waste management services, has boosted profit, Egyptian Resorts said. The firm reported a 57 per cent increase in the number of hotel units and apartments that it operates from a year earlier.

Analysts also say forex gains and revenues from interest income were also likely to be behind the gain in net profit.

While Egypt's economy and its vital tourism sector have slowed since January, Egyptian Resorts was confident tourism would boom as soon as European travel bans were lifted and "as political reforms are made and stability returns".

This would likely happen after presidential elections, it said. Egypt's interim military rulers have said parliamentary elections will be held in September and presidential elections soon after.

Egyptian Resorts said in August its board of directors agreed to take back a plot the company had sold for about US$11 million after the buyer failed to meet sale requirements.

Its unconsolidated net profit rose to 10.6 million Egyptian pounds in 2010, while unconsolidated net revenue nearly halved to LE16.9m.

Egyptian Resorts, which reported a consolidated net loss of LE3.9m in 2009, has not yet released a consolidated profit figure for 2010.

Its shares closed up 8.4 per cent, with the benchmark index up 3.01 per cent.

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