CAIRO: Egypt’s third-biggest listed developer SODIC posted a wider net loss in the first quarter, when an uprising shook the economy and some sales were cancelled, but said it was on track to complete its projects.
The high-end real estate firm, which does not fully recognize revenues until it delivers units, made a net loss of LE 16.1 million ($2.7 million), compared to a loss of 10.9 million in the same period last year.
Egypt’s property sector has been a major driver of foreign investment and growth but is now reeling from a string of legal rows over state land sales. Business has been dampened by a slowdown in the economy after months of political turmoil.
Graft probes into questionable land purchases after the ousting of president Hosni Mubarak have not directly implicated SODIC but the firm’s former chairman, the father-in-law of Mubarak’s eldest son, is facing trial.
"During a rough quarter, SODIC managed to keep to its 2011 plan by focusing on unit delivery, continued project execution whilst adjusting its strategy to accommodate the post revolution environment," the firm said on Wednesday in a statement.
Analysts say that in the real estate crisis, SODIC has emerged as a stronger candidate to weather the storm because of its presence beyond high-end homes and its stronger balance sheet.
The firm made net revenue of LE 41.5 million, up from LE 15.4 million a year earlier. It hadn’t started delivering units in its flagship Allegria project in the first quarter of 2010.
The firm’s said client cancellations or lower than expected payments during the quarter totaled LE 90 million. Analysts said this impacted its gross margin and hit its bottom line, helping to widen the net loss.
New contracted sales totaled LE 170 million, down 48 percent even compared to the first quarter of 2009, when real estate sales were hit by the global financial crisis.
The firm delivered 22 units in its Allegria project, worth LE 52 million, less than it had previously expected, SODIC said. It added that deliveries would be back to normal by the second quarter.
SODIC said it was on track to deliver 500 units this year.
Chief Executive Maher Maksoud told Reuters in February that SODIC was assuming zero new sales contracts for 2011, but was optimistic about Egypt’s growth prospects.
The firm said it had enough reserves and cash flow, as well as limited outstanding debt and land debt, to survive any short-term impact from the political turmoil.
"SODIC’s balance sheet is proving to be resilient in facing the current Egyptian real estate challenges and will continue to aid the company in plowing through the uncertainties of the coming period," the statement said.
The firm said it had LE 816 million of cash in the bank and bank debt of LE 132 million, LE 90 million of which is in Egypt. The firm also owes LE 154 million in land dues to be paid over the next five years, it said.
SODIC has scaled back its planned investments for 2011 to LE 1.2 billion from LE 1.8 billion.
